Audit Procedures: 7 Ways to Streamline Operations
In any kind of organization, whether it’s a Fortune 500 multinational company, or the small, local non-profit down the street, these places must be internally audited at some point in time. Most people associate the auditing process with the IRS, when they take a closer look at your finances if they think something is fishy. While that is one form of auditing, the version we are discussing today is different, and much less frightening, as it’s usually done at the request of the organization’s leaders themselves, and is meant to help the firm run more smoothly.
The guidelines for the internal audit, also referred to as the audit procedures, is our subject today. They dictate how and where the auditor should be looking at an organization in order to get a thorough and honest assessment of its inner workings. As you can imagine, this is a very organized process, that may appeal to people that thrive in that type of environment.
What Is an Internal Audit?
Every organization—whether a global corporation or a small local nonprofit—needs internal audits at some point. While audit might make you think of the IRS, internal auditing is very different. It’s typically initiated by the organization itself and is focused on improving operations, efficiency, and accountability—not penalizing anyone.
Internal audits help leadership understand how well their processes, controls, and systems are working. The goal is to identify strengths, uncover weaknesses, and make improvements that support long-term success.
Why Internal Audits Matter
So why request an internal audit if it’s not required?
For many organizations, the benefits are significant:
Key Benefits of Internal Audits
- Independent evaluation of processes and controls
- Improved ability to meet goals and objectives
- Increased accuracy and reliability of financial statements
- Better fraud detection and prevention
- Clearer understanding of regulatory compliance
- Stronger risk management and preparedness
- Opportunities to improve communication across teams
- Identification of training or skill gaps among staff
Publicly traded companies must maintain internal auditing functions, but many private organizations choose to conduct them as well because the insights are so valuable.
Tip: Although auditors work closely with management, they must remain independent to provide an objective review.
Understanding Audit Procedures
Audit procedures are the specific steps auditors follow to gather, evaluate, and document information. These procedures ensure a consistent, fair, and complete review.
Common Audit Procedures
1. Inspection
The auditor reviews internal and external documents—digital and physical—to verify accuracy, legality, and compliance.
Example: Examining maintenance logs for machinery to ensure safe, documented operation.
2. Observation
The auditor watches a process as it occurs to see if it’s being performed correctly.
Example: Observing how inventory is counted in real time.
3. Inquiry
The auditor asks questions to gather context and clarify information. This supplements other procedures but cannot stand alone.
4. Confirmation
The auditor verifies information directly with third parties to ensure accuracy—often used for verifying financial accounts or legal records.
5. Recalculation
The auditor re-checks math and calculations to confirm numerical accuracy.
6. Reperformance
The auditor performs a task themselves to ensure it is being executed correctly and consistently.
7. Analytical Procedures
The auditor compares expected vs. actual financial results to spot inconsistencies or unusual trends.
What Happens After an Audit?
Once procedures are complete, auditors provide insights that fall into two types of services:
Assurance Services
The auditor evaluates organizational performance and compares it to industry standards. This helps:
- Minimize weaknesses
- Validate compliance
- Improve transparency
Consulting Services
Requested directly by the organization, these services provide:
- Recommendations
- Training
- Risk management guidance
- Governance improvements
Internal auditing is detail-oriented, analytical work that improves efficiency, strengthens controls, and supports organizational integrity. The better the audit procedures are executed, the stronger and more resilient the organization becomes.
If this structured, investigative type of work interests you, exploring a career in auditing could be a great fit. Courses in audit compliance, risk management, or financial analysis can help you take the next step.
Top courses in Internal Audit:
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