Many organizations have to deal frequently with management letters and findings from internal audits. Management letters like reports from external accountants to the supervisory board or a company management. But they often have trouble resolving those points or providing proper follow-up.
In this article we give you a number of practical tools to better organize the follow-up of findings from management letters and internal audits. Use it to your advantage!
Which items are covered in a management letter and internal audit?
A management letter often contains findings and recommendation about the operational management and administrative organization of a company. For example, consider the internal control of processes and risks or the design and cost efficiency of the IT environment, but also the administrative organization of a company or institution and current developments in the financial and policy areas.
An internal audit mainly focuses on the proper and reliable functioning of business processes and working methods.
Organizations often have difficulty translating the findings and recommendations from management letters and internal audits into proper follow-ups and targeted improvements. The subject is (too) complex, while monitoring follow-ups and improvements is difficult due to the lack of good systems and dedicated experts. This is a shame, especially because targeted improvements take off slowly or not at all. This also detracts from the added value of management letters and internal audits.
The solution: 7 tools for utilizing findings
Fortunately, there are proven methods for extracting maximum value from findings arising from management letters and internal audits. We take a look at the most important ones.
- Designate an owner for each finding. Ideally, do this at management or board level to ensure sufficient authority.
- Try to link SMART actions (specific, measurable, achievable, realistic and time-bound) to all findings.
- Provide a monitoring system that structurally maps out how you as an organization handle all follow-ups and points for improvement. An automated tracking system makes this task easier, more efficient and less prone to errors.
- Record all findings and actions in a register in which you also record the progress on a monthly basis. Make sure that this is done by an independent department or position, for example by the risk manager. Periodically discuss the relevant overview within the management or board team.
- Ensure clear communication and documentation processes that unambiguously show how and by whom follow-ups to findings are handled.
- Discover trends in the overall picture of internal control. This way you can determine how internal control processes develop over time.
- Not every finding or shortcoming identified by a management letter or internal audit is equally important. So distinguish between important and less important points and focus most of your attention on shortcomings and points that can lead to serious risks for your organization. Think, for example, of financial loss, reputational damage, data loss and cyber risks.
This is how INTERMEDIATE can help
With the right mindset and the right people you get a lot of added value from management letter items and audit findings. In this way you create a strong basis for process improvement and internal control. INTERMEDIATE has the risk, compliance and audit professionals you need to ensure proper follow-up of management letters and internal audits.
Curious about the possibilities and our range of interim professionals?