We can define the audit universe as a list of all the audit activities that the internal audit function is expected to perform. It's made up of a variety of separate and different "auditable units," such as entities, processes, and actions. According to the organization's size, complexity, and scale, the number of these auditable units can vary widely. In extreme circumstances, the number can reach hundreds or even thousands of people.
It is possible to build auditable entities in numerous ways. One method is to build them according to the most important risks and controls. Another is by-product or service lines, business units, functional teams, business processes or systems, legal entities, or regulatory audits that are required by the company. This "living document" should be updated on a regular basis to reflect changes in business needs and risk exposure. Software that hasn't been updated can cause your intranet software pages to run slowly or not work at all, which certainly won't help with our first point!
The audit universe must be defined in order for the risk assessment process to be an effective driver for the creation of the audit plan. First and foremost, the audit universe is a dynamic document that must be updated on a regular basis. It should include all of the company's businesses, geographies, and functions. To create this audit universe, important business stakeholders and internal audit should work together, but audit should be the primary driver. This audit universe provides a mechanism to do an enterprise risk assessment, which is the primary purpose of this audit. Your risk officer and the chief audit executive may share this job, depending on the structure of your firm. The chief information security officer, in conjunction with the internal IT audit department, could also be in charge of developing a risk assessment procedure.
Information technology (IT) risk assessment is the process of laying out and ranking all of the most important aspects of a company's operations, including its financials, IT, and privacy. For annual audit activities, a good framework has been established after the completion of this assignment, which should be done annually. However, this IT risk assessment will almost evolve over the year as the company's strategic improvements have a significant impact on both internal and external risk factors.
Structure, methods, and risk maturity vary widely from organization to organization. You cannot expect it to be 'one size fits all' when it comes to the audit universe. As long as the risk-based approach to auditing is followed, internal audit should not assume that a list of all auditable areas is always essential or the proper thing to do. On a regular basis, you should assess whether or not you have or plan to establish an audit universe. The value and purpose of an audit universe should also be examined during the planning process. Audit universes are a useful tool for determining how often coverage is required and for verifying that coverage is complete. Moreover, if that coverage has been provided over the key required areas or as planned).
Creating an audit universe can be accomplished in a variety of ways. As a result, the audit universe has to be broken up into units (the names of which can vary, for example, being called an auditable unit, entity, area). Each of these perspectives on the organization can be used by internal audits for the purposes of risk assessment and audit planning. Key programs and projects can be used to represent essential change activities in several ways, such as business units/teams/areas of stakeholder responsibility, products, service lines, or nations. What works great for one business may not work well for another. An auditable area could be set up for each branch or outlet of a retail company in order to examine and monitor the day-to-day operations of its employees, who may be dealing with risk on a daily basis.
You need to get a consistent set of rules or guidelines that are used to create each auditable area so that each auditable area is roughly equal in size to the others. For example, if the chief audit executive focuses auditable areas on business units, each unit should be at about the same level in the organizational hierarchy. There are no hazards 'hidden' within one huge auditable area and never evaluated, thanks to this information being provided to the chief audit executive. Additionally, the chief audit executive can avoid spending more time and resources on auditing a smaller sector that may not pose as much of a danger. If the auditable areas are used to determine audit frequency, as we'll see later, this is an important consideration.
Customers, invoices, and other types of application data are all examples of business objects. Business objects are the means by which data is passed back and forth between various parts. An XML schema defines the basic structure of a business object.
An application module, the services it delivers, the services it consumes, and the composition of components that constitute the business logic of the application module are all defined by the service component architecture. The program relies heavily on business objects, which define the business data that is used to specify the service and component contracts and the business data that the components interact with, respectively.
Actor in the business layer of an object-oriented application that represents a business or an item within it is called a business object. In Java, a business object can be a session bean, an entity bean, or some other type of Java object. However, a business object is not a database in and of itself. It's a symbol for things like a bill, a transaction, or even a person. The object-oriented architecture of object-oriented software systems makes it possible for business objects to be scalable.
When used in object-oriented programming, a business object represents several aspects of a company. To illustrate, a business object can be anything from a bill to a product to a transaction or even a record of an individual's personal information. A business object, on the other hand, is typically a collection of instance variables or characteristics that may be manipulated. Client data queries to the data access object and data receipt through the Transfer Object are both possible for business objects.
For an audit strategy to be effective, it must focus on the most critical parts of a company's operations and distribute resources accordingly. By incorporating the Risk Register into the Audit Universe and connecting it to specific audit subjects or business processes, it is possible to create a risk-focused audit strategy. In addition, it can assist in identifying parts of the business that the Risk Register may not be considered at the moment. Mapping the risk register to business processes can highlight or emphasize how risk-averse a company may be and challenge the validity of the current risk thresholds, especially for mature firms or those with a high-risk appetite.
Knowing how the business now controls itself can assist auditors in prioritizing and directing their audit efforts. In addition, knowing the regulatory or legal requirements linked with each issue area can help uncover any gaps in present compliance systems or high-risk areas where audit findings have traditionally not been positive. Many organizations have found that an audit universe is advantageous. An organization's risk management methods and strategic internal audit plan can benefit from this information. Each business unit's risks, internal controls, and requirements can be mapped to an audit universe. As a bonus, you can also study audit records. Developing an audit universe is not a one-size-fits-all process because it must be adapted to the organization's size and complexity. In general, the audit universe should include an "optimal" number of auditable units.
Even in the modern-day, many internal audit operations are still relying primarily on spreadsheets and other disconnected software to carry out their duties. Executives in charge of internal audits must quickly learn, grasp, and integrate new technology that will enhance audit efficiency. Increasing internal awareness of the usefulness of your internal audit department will be easier with the help of standard technologies. You need to focus on:
Most boards and audit committees are keen to meet with internal audit executives and risk management specialists for updates on current concerns, risks, and operational efficiency processes. However, boards often put educational talks on the back burner because they have so much on their plates. In order to be thought leaders, internal audit executives have the option to suggest subjects and schedule presentations to the board and audit committee.
Join over 98,542 people who already subscribed.