Expert: Don Sadler - 2/25/2005

Question
I'll be conducting internal audit on my company's production department.
What are the things that I need to look for and how to ask the right questions?

Answer
Auditing a production department can take many different directions. The direction will determine what you look at and what questions you ask.  However, the good news is that auditing is not rocket science and follows a fairly simply and consistent pattern.

Simply put, auditing is comparing “what is” to “what should be”.  Once you recognize this, it logically follows that you first must identify “what should be”.  In other words, once you establish the overall objective of the audit, you have your focus and can proceed to conducting interviews designed to help you understand the environment and operation (in the context of your audit objective). You should defer asking questions until you know enough to pose the questions and understand the answers.  An effective technique is to start the interview by telling the interviewee to “tell you about the operation” and during the course of the discussion you can ask about what metrics are used, what internal controls exist to enforce business rules, and so on.  Obviously, the questions will become more natural as you understand more of their processes.

Every interview you conduct should have an objective or reason for having the interview.  The more you conduct (or repeat), the more specific your objectives will become.  Remember, you are trying to get to where you know “what should be” so you can compare it to “what is”.

A workpaper template I use to document interviews is as follows:

 Date/Time/Location:

 Participants:

 Objective: (The purpose of this interview is to.....)

 Information obtained during this interview:

 Conclusion:


What you need to look for depends on the audit objective and direction – financial, operational, or compliance.  This will become obvious as you engage the auditee.

Hope this helps.