The Benefits of Compliance Self-Audits
Could self-audits be a missing, or underused, part of your control framework? Self-audits can be a key part of providing an organisation with assurance that controls are in place and processes working effectively to mitigate risks and achieve organisational objectives. However, in our experience their use and/or their effectiveness has not always been considered.
What are self-audits?
Self-audits are an organisation’s internal review of compliance with policy and controls and form part of the second line of defence. They can be tailored to suit the organisation’s needs: covering any area, undertaken at any regularity and at differing levels of detail dependent on the organisation’s focus and risk appetite.
At Elsiarc we believe that effective self-audits consist of 4 stages:
Design
Completion
Reporting
Action Tracking
Why use self-audits?
Effective self-audits have numerous benefits which at Elsiarc we have grouped into two main themes:
Directly providing assurance through reporting to board and management
Effective self-audits are valuable because of their output: a valuable source of management information which can be used by boards and management to understand:
- what is working well and what needs to improve in the implementation of controls. This is by either evidencing that:
- processes are being followed and controls are embedded or
- gaps in control are being identified and action taken to protect the organisation before the risk materialises and the organisation must deal with the impact of non-compliance
- where policies are not understood and may need to be clarified and/or training given to staff
- the effectiveness of other sources of management information where they are cross referenced with the self-audits
Self-audits also demonstrate to stakeholders and regulators that risk management is taken seriously.
Indirectly providing assurance by promoting risk management and policy adherence
Effective self-audits are also valuable because of their input: they are completed by the staff undertaking the process, and this is where they can provide additional benefits over other sources of audit.
Whilst obviously the accuracy of answers must be considered the strength of completion by staff is that controls are only as strong as the people operating them (even in this age of automation!)
Effective self-audits:
- develop and embed a culture of risk management and promote knowledge of policies as staff are involved in their completion
- leverage the knowledge of the staff who are closer to the process and the detail of how it should work, leading to constructive discussions around control design if applicable
- facilitate collaboration between different departments or functions to ensure the sharing of best practice and a joined-up (and therefore more controlled) approach where processes cover more than one function
Elsiarc - Internal Audit, Risk and Compliance Services
At Elsiarc we look to work with your organisation, coupling our risk management and audit expertise with your subject matter experts’ knowledge of the processes to ensure that self-audits are current, focussed and accurate; aligned with risk registers and policies and prove clear, insightful information to management and boards.