When I began my career as an internal auditor I was lucky enough to have a seasoned auditor as my mentor. They taught me the ABCs of auditing, which were then confirmed, and even more embedded in my natural auditing process when I studied and passed the Certified Internal Auditor exam. Through this experience, I learned that one of the most important steps of an internal audit is an interview.
This frequently overlooked step is often the thing that separates a good auditor from a great one. Let’s dig in and find out why interviews are so crucial to the audit process, how they can enhance the effectiveness and value of your audits, and provide you with some guidance of how to perform them.
Gaining Insights through Direct Interaction
In our digital age, we often look for the easiest way to get the information we need. Outside of work we have most things we need at our fingertips, without even having to have a conversation with another human. So it is logical to attempt to recreate this at the office. Auditors commonly attempt to fulfill the need to gather information from others with Internal Control Questionnaires (ICQs), which is a fancy way of saying a written interview that requires no human interaction. While ICQs can be beneficial in the audit process they are not a true substitute for sitting down and talking with a human in person or virtually.
Interviews offer you the chance to gain insights through visual and verbal clues that would be lost in an ICQ. These clues can lead to follow-up questions that allow you to probe deeper, clarify ambiguities, and possibly uncover hidden information. An interviewee may hint at something through hesitation or a change in body language that could prompt you to dig deeper and uncover an issue that you need to research more. Often issues found during interviews lead to some of the most useful and value-add recommendations in your final audit report.
Validating Information and Enhancing Reliability
As an auditor, you can research a process, read policies and procedures, and comb through rules and regulations and think you understand how a process works. However, until you sit down with the people who are completing the process every day, it is impossible to fully understand how it is completed in real life.
“Why does that matter?”, you may ask. It matters because according to the Institute of Internal Auditors, one of the critical goals of the profession is to add value and improve the organization’s operations. Interviews play a pivotal role in any audit project by helping you fully understand the processes you are auditing and allowing your team to validate the information provided. By comparing responses obtained during interviews with documented evidence such as policies and procedures, you can assess the consistency and credibility of the data while fully understanding the process. This can lead to useful findings that add more value to your organization. Which is our goal!
Before, During, and After Interviews
Now that you better understand the importance of interviews, it is time to brush up on how to prepare for, conduct, and appropriately document your interviews. We have an extensive list of what to do before the interview, during the interview, and after the interview in our Interview Guide and Notes Template in The Audit Library for banks and credit unions. I’ll provide you with some of the highlights here.
Before the interview, it is essential to prepare a list of open-ended questions. If you have questions that lend themselves to yes or no answers, include follow-up questions that require more detail. Brainstorm some possible responses from your interviewee and think of how you would proceed in different scenarios. You also want to make sure you are in a space where you and your interviewee will not be distracted, regardless of whether you are meeting virtually or in person.
At the beginning of your interview, get to know the person you are talking to. Ask some icebreaker questions about their life, and share something about yourself. This will help someone who may be nervous to talk to an auditor lower their guard a bit. Before you delve into your “real” questions make sure to explain the purpose of the interview in a way that is casual, such as, “I would love to get an understanding of how you go about the underwriting process for a consumer loan today, so my questions will be centered around that.”
During the interview you must be an active listener, but don’t attempt to lead the interviewee in any way. You want to get the information directly from them in the most truthful way possible. Allow the subject time to think, answer, and comment, even if there may be an awkward silence as a result. It is also crucial to document your interviewee’s responses during the interview. You may use a recording device, with the permission of the interviewee, in order to create a more accurate written account for your workpapers. If taking written notes, you do not have to write down what they say verbatim, but you should be able to document the key points of their answers to each question. Don’t be afraid to pause to ensure you are documenting answers appropriately, or ask the interviewee to repeat themselves if you didn’t catch what they said the first time.
Directly after the interview, allow yourself some time to review and expand your notes. Clean them up and ensure they are in a format appropriate for your audit workpapers. If the interview you were conducting was to walk through a process, it may be appropriate to write a narrative of the process and then send it to the interviewee to confirm you fully understood the process. If your interview was to gather information and opinions, to access fraud risks, or for any other reason, it may be appropriate to email or call with follow-up questions if you need more information after you have composed your notes. Documentation of your conversation is key to the audit process.
Interviews are integral to the audit process. They can help you gain deeper insights, validate information, and provide recommendations to strengthen internal controls, thereby adding more value to your organization.