How to Create an Internal Audit Checklist (+ Template)

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“We are deeply sorry” was all CrowdStrike could say after a faulty software update caused the infamous Blue Screen of Death (BSD) for millions of users worldwide. In addition to a 10% drop in the stock price in one day, CrowdStrike had to answer to angry customers and the US Congress, no less.

While this may seem like an extreme case, unintentional errors are quite common in businesses. With multiple teams in different geographic areas working on complex problems, any number of things can go wrong.

One of the most common – and effective – ways to avoid these disasters is internal auditing. With a solid process and governance, risk and compliance (GRC) software, organizations can proactively identify potential problems and address them in advance.

In this blog post, we will explain how you can create an audit strategy and implement it with a powerful internal audit checklist.

What is an audit?
An audit is a process to systematically examine and evaluate processes. These processes can be financial, operational or compliance related.

For example, internal auditors periodically thailand number data review your company's bank statements to assess whether there are errors or fraudulent transactions.

A service organization, such as a restaurant or spa, might conduct audits on how staff complete delivery. Tech companies often use dogfooding as a way to conduct internal audits as well.

Why is an internal audit necessary?
Simply put, an internal audit is designed to detect problems before any work is published to the outside world. This ensures the following:

Accuracy : Audits provide teams with an additional opportunity to ensure that work is accurate, complete, and error-free.
Risk management : Internal auditing identifies potential risks, which can be mitigated in advance to avoid losses and penalties.
Quality : Audits also help ensure the quality of results by verifying whether they meet industry requirements and standards.
Performance : Internal audits sometimes assess performance to simulate a real-life situation.
Compliance : Being the most common reason, internal audits help to comply with applicable laws, regulations and standards.
Stakeholder Assurance: In companies where there are investors or shareholders, internal audits build confidence in the organization's operations and reporting.
What are the types of audits?
Depending on the nature of your business, its goals, needs and stakeholders, you can conduct a number of different audits. Most of them will fall into the following three categories.

Internal audit
An internal audit is performed by an organization for its own needs. Auditors are either active employees of your organization or subject matter experts within the department performing the audit.

For example, every year, the talent management team could conduct an internal audit of each employee’s compensation structures. This would serve to identify any unconscious bias or inequality.

External audit
An external audit involves bringing in independent experts to assess an organization's processes or results. In addition to the internal audit team, external auditors bring a broader range of knowledge and experience. This adds credibility and builds trust in the organization.

Industry bodies and standardisation organisations regularly carry out external audits for companies. ISO certifications are the most sought after in all sectors.

Other examples include the Forest Stewardship Council for sustainable forest management, LEED for building design and management, and Leaping Bunny for 100% animal testing-free products.

Compliance audit
Compliance audits assess whether an organization is in compliance with certain laws, regulations, or internal policies. These audits focus exclusively on compliance with industry standards, contractual obligations, or government regulations to avoid penalties and maintain ethical practices.

In the technology space, regular audits for GDPR or HIPAA compliance are standard practice. Each industry has its own compliance requirements, for which organizations must conduct regular audits.

Whether you do them internally or use outside help, audits are a necessity if you run a business. **It ensures all stakeholders - customers, investors, shareholders, employees, suppliers, partners, etc. - that the organization is in compliance with its standards.

To ensure this, you need a comprehensive, goal-oriented audit strategy. Here's how to create one.