24 Apr Internal Audits and GRC: What You Need To Know
The Institute of Internal Auditors North America (a group whose conventions are, we are sure, absolutely lit) has quite a bit to say about the purpose of internal audits. They’ve even boiled it down to a mission statement: the purpose of audit is to “enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight.” What does that mean? It means looking at yourself and figuring out what’s wrong, and what you can be doing better to minimize risk, streamline operations, and reduce the chances of error.
Audits should be done regularly, but we understand that they can be a bit scary and daunting. We all know we have blind spots, and we know there are things we’ve missed. There are processes that we’ve gotten used to, even if they are costly. Uncovering a lot of issues in your operation often presages big changes. However, the purpose of audits are to find the pressing issues, the missing components, and the risks that may present a danger or inefficiency. An audit gives you the chance to take action, to make corrective changes, to prepare with contingencies, and to plan for remediation if something does happen.
That’s why having a consistent, objective, and rigorously-implemented system of Governance, Risk, and Compliance (GRC) is so important. It helps you minimize the effects issues exposed by an audit by evaluating all systems regularly and creating consistent risk-management processes. It helps you understand your organization even outside of audit time.
A GRC program won’t replace your audit. It makes the auditing process on-going, less disruptive, and more productive.
Internal Audits and GRC: Terms and Functions
There are two primary kinds of audits: internal and external. External audits are those conducted by potential partners, regulators, and investigative bodies. Internal audits are those you conduct yourself or hire an outside firm to conduct.
If an external audit is like visiting your doctor to find out what’s wrong, an internal one is doing self-evaluation. You recognize that you order take-out too much, don’t get enough exercise, and really, that driving to work instead of taking the train is actually costing you more and reducing walking. You know what changes you have to make before someone else shows you the danger of not making them.
Internal audits have four primary functions:
- Provide insight into your operations. You know what your business is supposed to do, but an audit helps you see things from the ground floor as well as from 20,000 feet. You’ll be able to peer into every nook and cranny, office, and department.
- Identify roadblocks and improve efficiency. Where are you losing money? Where is there redundancy in your system? At what point in your system are things getting jammed up? Where do mistakes happen, and most importantly, why?
- Identify all risks for non-compliance. In the dizzying complexity of global organizations there are thousands of risks for non-compliance, each one posing a danger to your business. These are imposed externally, but the risks come from within. An audit helps you recognize what you need to do to stay compliant.
- Evaluate internal processes. You’ve done things a certain way since forever, and have found success. But success doesn’t mean that your system is flawless. Every process can be improved.. You may not even understand that your old processes may be outdated or even non-compliant by current standards. You can figure out how to make your system run more efficient, more compliant, and more flexible for upcoming changes..
One of the biggest benefits to an internal audit is that you are preparing yourself for the possible external audits. You have all your processes documented. You have clear paperwork showing how you are staying compliant, and the exact mechanisms with which you follow regulations. You already can show your success.
On another level, internal audits help with external ones because you’ve addressed the problems that might trigger adverse auditing findings. It’s like your doctor saying “Your test results show great improvement, however there are a few items that we need to still work on.” You’re already doing things the right way, but there is always more to do. You can fix the immediate issues, but then you can work on the preventative measures like risk remediation and contingency plans.
How GRC Complements Your Audit Process
Governance, risk, and compliance doesn’t replace an audit. Instead, GRC makes every internal audit more efficient by allowing your audit process to be conducted via the system more effectively.
Anyone who says that what you don’t know can’t hurt you never worked in compliance or security. You have to be aware of what the internal and external risks in the system are. That’s the only way to make sure an audit successfully identifies what risk you have. GRC, first and foremost, is designed so that you understand what you are looking for. There are several ways that consistent GRC programs make your business run more smoothly.
Plan, Manage, and Conduct Compliance and Risk Audits
Using the audit results, you can now plan, manage and utilize the findings to take action to mitigate risks, make policy and program changes and update system configuration where applicable. Once these changes are made, you can validate the results with the GRC reporting and tools to confirm improvements to required compliance and final audit findings.
Monitor and Audit Temporary or Emergency Access Requests and Usage
There is always going to be a need for access request for your SAP system, or other vital parts of your operations. These are inevitable. But GRC gives you an easy and automatic way of granting approval to those who are cleared while denying it to those who aren’t. This can be time- and location-based as well. It is a flexible system that easily puts you in control of your policies, minimizing risk without adding layers of paperwork, red tape, and delay.
Use Real-Time Analytics to Identify Potential Risks
In global organizations, things are always changing. Your business makes adjustments, regulations shift, vendors change their supply chains, and more. All throughout the system risks multiply, being resolved, popping up, and changing. A successful GRC system balances your goals and processes with the changing nature of the system in real-time, helping you stay ahead of the game.
Use Automation to Reduce Effort
Any time spent on access requests is wasted time. Any time spent coordinating permissions and paperwork is wasted time. It is time that could be spent elsewhere. GRC helps you automate processes that are too often done by hands. This needless expenditure of your most valuable resources—the time and talents of your people—is a loss for your business.
All of this helps make your audits more successful by streamlining processes and eliminating areas of human error. Every audit is less disruptive because the right things are already being done. To continue our earlier metaphor, GRC is like having a full-time doctor, trainer, and nutritionist giving you the advice you need to make the right choices. With GRC, communication becomes inherent within the system ensuring compliance by all responsible parties with triggered reporting, monitoring tasks and access requests.
GRC just makes audits easier. You can automate the process with standardized reports and compile supporting documentation and communications easily. You essentially have everything you need for your audit at all times.
Aurum Terra is your partner in implementing SAP GRC. We understand your business, needs, and what it takes to manage a successful implementation. With the right GRC implementation, audits don’t have to be disruptive. They can reveal a business that is running smoothly because it has automated its processes and reduced or eliminated potential risks.
Aurum Terra, Inc. specializes in governance, risk, and compliance (GRC) and global trade services (GTS). We have more than 20 years of successful SAP implementation experience. Contact us today to realize greater efficiency in auditing and trading operations overall.