Three Things You Need to Know to Save Time on Your Next Internal Audit

Don't be surprised if your next internal audit’s review of AR takes longer than usual. A new set of audit standards became effective earlier this year, leading auditors to expand their review scope.

Here’s what you need to know about the Institute of Internal Auditors’ newest Global Internal Audit Standards:

Increased Emphasis on Internal Controls
Auditors will scrutinize AR processes and controls more rigorously. Organizations should be prepared to share their documentation related to invoicing, collections, and adjustments to reduce financial risks.

This is especially true of auditors’ new “principle-based standards”. Because auditors will be given more judgement in evaluating AR, team leaders should maintain clear documentation of policies, approvals, and exception handling

Stronger Risk-Based Focus
Internal audits will prioritize high-risk areas within AR, such as overdue payments, credit risk, fraud, and misstatements. AR teams should assess and mitigate risks by tightening credit policies and improving collection strategies.

Greater Use of Technology and Data Analytics
Auditors will also increasingly rely on data analytics to detect anomalies and potential fraud. This could lead to pressure on AR teams to use automated tools for reconciling transactions, identifying overdue accounts, and ensuring data accuracy.

Knowing what they’re looking for can help you proactively speed up the audit process as well as do a better job of thinking through internal controls.