Best Business Practices, Part VI

Internal Audit Procedure

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If you’ll think back to the beginning of our discussion on best business practices, you’ll remember that we summarized the two key elements as great effort and a successful formula.

Just as a business develops a formula and expends great effort on serving its clients, top businesses also develop a formula and expend great effort to constantly improve internally. An internal audit is a key element in this equation.

While continuously updating your methods for collecting data (or in our case, collecting money from debtors), you need a way to make sure these methods are working effectively and efficiently. By auditing your company annually, you can ensure your processes and procedures are operating as such.

In the same way a disaster recovery plan is necessary in planning for outside forces, an internal auditing plan is necessary to accurately and comprehensively assess all internal forces. Nobody knows your business processes better than you, so rather than outsourcing this critical task, draft a procedure and perform it in house. Internal audits will not only save you money and help to prepare you for inevitable external audits, but they will allow you another measure of data security and the flexibility of doing so when production will be impacted the least.

There are several steps to develop and perfect an internal auditing procedure.

Decide what you are measuring

Use your processes and procedures manual or job description files to make a detailed list of what you are auditing.

Write a procedure

This procedure should be systematic, disciplined and replicable. The audit should be able to be performed by any member of your team to control for bias and make it time-efficient.

Conduct an audit and capture findings  

Once you have drafted a procedure, conduct an audit based on what you have. When you actually go through the auditing process, you find things that you missed when developing your methods and writing the audit procedure.

Share the findings with your staff and make changes

Discuss the issues and inefficient practices with your employees and brainstorm on ways to improve these practices. Use standard criteria to measure findings and apply changes.   Make sure your team understands why the procedure is being changed and how it will help efficiency.   Once changes have been implemented, follow-up on the reported findings regularly to ensure the best results.

Consistently update (as your processes change)

Once you have implemented changes, you will need to change your internal audit procedure to reflect that so that you will be measuring the success of your new procedures during the next audit. Make sure you keep the results from each internal audit so you can compare them and see how your changes have made a difference.

Repeat

Internal auditing is a process that should be repeated annually or semi-annually.

Remember, by constantly updating your methods and driving your company toward improving their success, you will achieve your ultimate goal of providing the best service to your customers in the most efficient manner possible.

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Drop by next week for Better Business Practices, Part VI on call monitoring procedure.

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