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Hello, welcome to Getting Started With, where our job is to make your job easier.
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On this episode, we're getting started with automation basics for internal auditors.
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In this video, you'll learn what automation means for your work as an internal auditor.
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We'll cover 2 important angles, how automation shows up inside the processes you audit, and how you can use automation tools to do your own audit work more efficiently.
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By the end, you'll have a
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solid foundation for thinking about automation, whether you're testing in control or looking for ways to save time on the job.
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So let's get started.
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Picture a factory floor.
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Workers used to do every single step by hand.
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Then machines came in.
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The conveyor belt moves products along automatically, robotic arms assemble parts at exact intervals.
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Humans are still there, but now their job is to design the process, watch for problems, and step in when something breaks down.
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That shift from manual to automated is what's happening in business processes everywhere.
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And as an internal auditor, your job is to understand how those automated systems work, whether the controls built into them are effective, and whether the right people are overseeing the machines.
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Let's start with a term to learn.
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Automation is the use of technology to perform tasks or processes with minimal or no human intervention.
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In plain terms, a system does the work instead of a person, and the auditor's job is to make sure that system is doing it right.
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There are two distinct ways automation touches your work as an internal auditor.
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First, there are automated controls inside the processes and systems you're auditing.
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Second, there are automation tools you can use to do your audit work more efficiently.
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Think of our factory.
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You need to understand how the machines on the floor work, but you also have your own set of modern tools to help you inspect them.
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Let's take each one in turn.
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First, let's talk about automated controls inside the processes your organization uses.
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These are controls that a system performs without a human having to do anything.
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They're built into the technology itself.
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This is our next term to learn.
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Automated controls are controls that are performed by an information system without human intervention designed to prevent or detect errors, fraud, or other irregularities.
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In plain terms, the software catches the problem before a person even has to look for it.
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Back to our factory.
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An automated control is like a sensor on the conveyor belt that stops the line if a product doesn't meet weight requirements.
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It doesn't wait for a worker to notice.
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It acts instantly, every time.
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Some common examples of automated controls include a system that won't let a purchase order go through if it's above a set dollar limit, software that flags a duplicate invoice before it gets paid, a data entry field that only accepts valid date formats, a system that automatically reconciles accounts at period close.
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These controls are often more consistent than manual ones because they are applied the same way every time to every transaction.
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That consistency is one of their biggest advantages.
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When you're testing automated controls, the testing approach is a little different from testing manual controls.
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Here's a pro tip.
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An automated control either works or it doesn't.
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If it's configured correctly and the system is running as designed, the same result will happen every time.
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That means once you confirm the control is correctly configured and operating, a single well-documented test can provide sufficient evidence.
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The key is making sure you're testing the right thing, the system configuration itself, not just one transaction.
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If the control is set up correctly, every transaction benefits.
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If it's not, every transaction is at risk.
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When you're auditing a process with automated controls, there are four questions you want to answer.
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Is the control correctly configured in the system?
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Has it changed since it was last reviewed?
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Who has access to change the system settings?
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And are there manual overrides?
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And if so, are those overrides monitored?
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The last one is especially important.
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Automated controls can be bypassed.
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If someone can override the system without anyone knowing, the control isn't as strong as it looks on paper.
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Watch out for this common mistake, assuming that because a control is automated, it's always working correctly.
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Automation reduces the need for human intervention, but it doesn't eliminate the need for human oversight.
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Systems can be misconfigured.
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Settings can change.
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People with the right access can turn controls off or work around them.
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So, your job as an internal auditor isn't to assume the machine is working.
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It's to verify it.
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Here's a time saver.
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For repetitive controls, consider using a data analytics tool to test the entire population of transactions rather than pulling a manual sample.
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The tool can flag exceptions automatically.
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You get more coverage and it takes less time than manual sampling.
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It's one of the clearest cases where using automation in your own work directly makes your audit results stronger.
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Now let's flip to the other side.
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Automation isn't just something you audit.
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It's also something you can use.
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The global internal audit standards say that internal audit functions should use technology to improve their effectiveness and efficiency.
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Standard 10.3 specifically requires the chief audit executive to regularly evaluate the technology used by the internal audit function and pursue opportunities to improve.
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That applies to every auditor on the team, not just leadership.
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What does that look like in practice?
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It means using tools to do things that used to require manual effort.
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Things like pulling and sorting large amounts of data, tracking open findings, scheduling follow-ups, or building dashboards that show the status of the audit plan at a glance.
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These aren't fancy or futuristic ideas.
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They're practical ways to spend less time on repetitive tasks and more time on thinking and judgment that only auditors can do.
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Let's define our next term to learn.
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Audit automation is the use of technology tools and techniques to perform audit tasks with less manual effort, including data analysis, workflow management, and reporting.
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In plain terms, using tools to do the routine work faster so you can spend more time on the thinking.
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Some of the most common ways auditors use automation in their own work include:
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Data analytics tools which let you analyze an entire population of transactions rather than just a sample.
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Automated work papers and checklists which standardize how the team documents its work.
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Audit management systems which track open findings, deadlines, and the status of management's responses.
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And workflow tools that can send automated reminders when action plans are approaching their due dates.
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You don't have to use all of these at once.
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Even one or two can make a real difference in how efficiently your team works.
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Here's a bright idea.
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If your team is still using spreadsheets to track open audit findings, look at whether your organization's audit management system or even a simple workflow tool could automate those status updates and follow-up reminders.
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Manual tracking of due dates is exactly the kind of repetitive task automation handles well.
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Freeing your team from that kind of administrative work gives them more time for the analysis and judgment that drives value.
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One more thing to watch out for.
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Automation is a tool, not a replacement for your judgment as an auditor.
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A data analytics tool can flag anomalies, but it's your job to decide whether each anomaly is a real risk or a false alarm.
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The tool gets you information.
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You interpret it.
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Make sure you understand what your automation tool is doing, what data it's looking at, and how it's reaching its conclusions.
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If you can't explain the methodology, you can't stand behind the results.
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And always document not just what the tool found, but how and why you used it.
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Thanks for watching Getting Started with Automation Basics for Internal Auditors.
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If you found this helpful, check out our episodes on data analytics basics and IT audits to keep building your technology skills.
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You can find these and other helpful resources, including tools, podcasts, and training at the links below.
