Using Flowcharts for Internal Auditing

Financial and operational audits are a regular feature of modern business practices. These exercises are important because they enable brands and businesses to implement internal controls, evaluate the cost of using capital, create reliable financial reporting systems, etc. The outcomes of an audit exercise help business management teams to assess the performance of the enterprise, facilitate supervision and monitoring, and to identify any scope for fraud, among other things. Flowcharts can help attain the objectives of an internal auditing exercise. Business managers and other stakeholders can use these diagrams to track the flow of actions that drive a business. These flowcharts also enable business enterprises to create scope for process improvement and thus improve business outcomes.

An internal auditing process commences with a decision to undertake an audit exercise. Business owners, process managers, and other internal stakeholders must reach a consensus that such a process will ultimately boost the performance of the business. A flowchart can help the audit team to create an organizational chart to facilitate the process of internal auditing. The flowchart designers can discuss with above stakeholders the points of view that will drive the audit process. Some of these exercises can be driven by the need to identify choke points in business processes. Other exercises may seek to identify the points of leakage or wastage of resources. A different internal auditing exercise may seek to reinforce the points of accountability that are expected from multiple stakeholders. Flowcharts can help outline these auditing exercises and may impart direction to the subsequent process.

Flowcharts can focus exclusively on decision points as part of an internal auditing exercise. This point of view is important because decisions are crucial to the success of any business organization. For instance, a flowchart can highlight the important decision points in a business hierarchy, track the outcomes that flow from such avenues, and evaluate the efficacy of creating alternative points of decision. The internal auditing aspect emerges when businesses closely examine the outcomes of past decisions and their impact on the achievement of stated business objectives. This exercise essentially seeks to spotlight utility of such sustaining legacy decision points within an organization. New thinking may indicate that alternative points of decision higher or lower in the business hierarchy may help the organization achieve business goals faster. The flowchart may thereby need modification to accommodate the new lines of thinking, thereby driving a certain change management initiative across of organization. This illustration clearly outlines the utility of using flowcharts in internal auditing processes.

A significant part of modern audits relates to interviews conducted with relevant stakeholders within an organization. Brands and businesses can leverage the power of the modern flowchart to create an internal auditing roadmap that hinges on interviews. For instance, the flowchart may identify the top three positions within a business vertical for interactions with the audit committee. In line with this, the flowchart may depict the top three positions in every business vertical that comprise an organization. The final picture that emerges from this initiative clearly outlines the personnel that must be interviewed as part of the internal auditing exercise. The points of view, insights, information, and suggestions that emanate from these interviews enable drivers of the internal auditing process to gain a clear picture of the human capital that drives business processes. In light of the above, flowcharts are critical in driving certain functions that comprise an internal auditing initiative.

The fully developed flowchart that follows an advanced internal auditing exercise may indicate paths to business expansion and the scope for leveraging new business opportunities. In addition, the audit exercise may reveal significant scope for improving certain business processes and boosting potential business outcomes. For instance, an internal auditing process driven by managers of a packaging business may reveal significant upsides in scenarios wherein certain clients are targeted with upselling campaigns. This insight is valuable because it adds to the bottom line, enables business managers to boost dollar incomes per client, and generally expand the scope of business operations. That said, the flowchart might instruct managers to invest more in safeguarding the integrity of a business process; this can be significant because it enables the business to create streamlined, high-quality packaging products that impress regular clients. In light of these facts, we state that a flowchart-driven auditing process can unearth gems of business wisdom and help the enterprise to flourish in competitive markets.

The scope of any internal auditing exercise remains significant in modern times. Therefore, organizations can create flowcharts to review current levels of documentation within a business and the scope to expand this aspect in the future. For instance, a manufacturer of engineering products can design flowcharts to pinpoint the exact levels of available documentation for each business process. This aspect of auditing is crucial based on the fact documentation is a valuable resource to win new clients and to comply with government regulations. The audit flowchart may reveal deficiencies in documentation and unearth similar gaps in business processes. These lapses must be viewed seriously and said business operator must act with alacrity to eliminate such gaps. In addition, the image emanating from said flowchart can help the business operator to affix future responsibilities in terms of updating documentation in step with changes in process implementation, etc. This illustration is an illuminating example of the power of flowcharts to drive an internal auditing initiative.

Fraud prevention remains one of the core motives that drives modern internal auditing exercises. Business owners and operators can design flowcharts specifically to identify the scope of fraud inside a business process. Fraud may potentially take the form of under-invoicing, sweetheart deals with suppliers, leakages and deliberate oversights in accounting and book-keeping processes, collusion, gaps in the supply chain, etc. Therefore, a flowchart can help business operators drive a scrutiny and identify any scope that exists to perpetrate fraudulence. The flowchart may recommend deeper audits, interviews with personnel involved closely with business processes, examine the quality of software that drives the value chain, interfaces with customers and suppliers, etc. In addition, the flowchart may explore and unearth potential nexuses wherein a business may lose or cede ground to the competitor. In light of the above, we state that flowcharts are critical instruments that can impart deeper meaning and heft to an internal auditing exercise.

Modern brands and businesses should undertake an internal auditing initiative with a view to identify time lags and steps that add zero value to a business process. This facet of the audit exercise must delve deep into the individual aspects of the many stages that power a business process. Time lags may emerge in taking finished products from factories to the market, in transit, in clearing bills due to suppliers, in availing credit mechanisms from institutions, in implementing innovation inside regular business processes, etc. Time lags cost money and therefore, the flowchart should meticulously identify the sites of such lags as part of the auditing exercise. In addition, the focus of the audit must include the elimination of stages that add zero value to the business. This aspect of the audit can empower a business to attain a lean mode wherein, it gains extra dollars for every unit of resources that it consumes.

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