Internal Audit Manual Template
Updated: Nov 6, 2020
Whilst each audit department should abide by the requirements as set out in the International Professional Practices Framework (IPPF), it's the audit manual which spells out specifically how the audit team will uphold these standards.
In this post, we're going to explain what an internal audit manual is, what it contains, why you need one, and how to successfully implement a manual into your audit team. Throughout this post, we're going to demonstrate various aspects of the audit manual with our own internal audit manual template. You can download a free copy of our template here, our purchase the editable version here.
What is the internal audit manual?
The internal audit manual is a central document which should be easily accessible and well understood by all audit team members. The manual should be at the core of everything the audit team does.
Basically, the internal audit manual is like the cook book for the audit department. This 'cook book' will give you instructions on how to do everything in your audit function, similar to how a cook book gives you instructions on how to bake a cake.
The Institute of Internal Auditors (IIA) states the following:
An audit manual outlines the authority and scope of the internal audit function, documents standards, and provides cohesive guidelines and procedures. These guidelines promote consistency, stability, continuity, acceptable performance standards, and a means of coordinating the efforts of audit staff effectively.
What does an Internal Audit Manual contain?
The content of an Internal Audit Manual can vary between departments. How the manual is written can also vary substantially. Some are very perspective, and others are more conceptual. Our Internal Audit Manual template covers 6 key areas:
Introduction - spells out the background of the manual, intended audience, and general maintenance of the manual.
Internal Audit Department - spells out the hierarchy, roles, and responsibilities of the audit department.
Annual Planning - spells out the process, requirements and timeline for the annual planning process.
Internal Audit - spells out the process, requirements and timeline for a generic internal audit.
Performance - spells out the KPIs and performance metrics attached to the internal audit team.
Audit Function Management - spells out the day to day admin tasks to be performed within the audit department, as well as any regular reporting such as audit committee and monthly action tracking reports.
Our Internal Audit Manual template describes the nature of the tasks to be performed for each of the process, rather than going into specifics. Where an audit manual is too prescriptive, it can cause issues later on, particularly when the department has a quality assessment and audits have been performed which do not strictly comply with the manual. It is reasonable for audit approaches to be tailored, specifically where the audit relates to agile processes such as software development, and as such, the stereotypical audit approach may not apply entirely.
Why you need an Internal Audit Manual
Put simply, an audit manual sets the expectations of the audit team, ways of working and helps ensure high quality reviews are conducted. It is an invaluable resource for team members, who can (and should), use it as a reference guide to ensure that they are performing their reviews in compliance with the audit standards.
How to implement the audit manual in your team
Implementing a manual and process into a team is never easy, particularly where the team has been used to a previous way of working for a long period of time. This article by Entrepreneur has set out 8 steps which are very much applicable to implementing an audit manual in a team. The steps are:
Create a plan - How are we going to implement the new manual. What are the timeframes for implementation, what training needs to be delivered, what audits are going to be the first 'trial run' under the new methodology, etc. These are all factors to be built into your implementation plan.
Understand the end goal - Your end goal will likely be related to quality, efficiency, timeliness, consistency, or a combination of all. Making sure this goal is clear, how the new internal audit manual will address it, and communicating this to your team is essential.
Communicate clearly - In addition to communicating the goal, its important that the plan, and expectations are also clearly communicated.
Identify key players - Your managers are critical to ensuring that the new manual is implemented and upheld. They will be responsible for making sure audits are performed in compliance with the new manual, and as such, they should be reminded of this responsibility.
Delegate tasks - Everyone in the team has a role to play. Its the Head of Audit's role to actively communicate the new manual at each team meeting and spruik its benefits. Its the managers responsibility to ensure it is embedded, and its the junior audits responsibility to adhere to it. Managers should, as part of their audit review process, recognise and celebrate where team members have adhered to the manual well and share this during team meetings.
Set clear objectives - The objectives of implementing the new manual, such as ensuring quality, efficiency, timeliness, consistency, or a combination of all, in our audits, should be communicated and made clear throughout the implementation process.
Manage expectations - Change isn't easy. Some people embrace change more than others, and therefore, its important that we set expectations which set the standard. However, in setting expectations (such as what good looks like in an audit under the new manual), we should recognise that some people may need more hand holding then others. In such instances, managers and other key players should be reminded of their role as not only a change implementer, but also a supporter.
Hold people accountable - Managers are integral to implementing the new plan. The Head of Audit should hold them accountable and ensure managers are correctly adhering to the new plan, just as the managers should be supporting and ensuring that the plan is being implemented by those completing the bulk of the audit work.
You can review examples of our internal audit manual (or internal audit methodology), below:
Our audit manual has been prepared in a number of languages. To view the FREE templates, please click here:
To purchase an editable version of the templates, please click here:
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