Auditors regularly comment that the tone at the top of the company flows downward, seeping into every employee level. Would you consider the work atmosphere of your company to be ethical and open? Corporate culture assessments can assist in preventing and uncovering unethical and criminal behaviors, if not. To do a thorough job, however, your external auditors will typically need to work closely with people inside your company. Read on for ways you can facilitate this essential part of the audit process.
Identify a senior executive to act as a liaison
Corporate culture is a critical component to an auditor’s comprehensive risk assessment — however, for most institutions, auditing corporate culture is a new concept. To make certain that company insiders cooperate, appoint a senior executive to act as liaison with the audit team. This executive must comprehend the auditing process and hold the authority to settle any issues brought about by employees or executives during audit fieldwork.
Verify the audit team’s expertise
Have the audit team members ever participated in a corporate culture audit before? Request that the engagement partner furnish biographies for audit team members, listing their background with performing corporate culture audits and conducting investigative interviews of company insiders.
Interviews can assist in pinpointing any potential weak spots that need additional notice during audit fieldwork. For instance, should management downplay the importance of complying with government rule and regulations, the audit team will probably have to commit more resources toward the company’s compliance efforts.
Allow auditors to survey all employees and executives
Auditing corporate culture calls for a companywide evaluation of the prevailing mentality. The survey must cover a broad employee sample — more than just those who happen to be at corporate headquarters or executives in the C-suite.
Have your executive liaison look over the questions before the auditor distributes the surveys. This will help reduce ambiguity, leading questions or offensive inquiries. He or she can also assist the audit team by determining which key executives and employees to interview.
Provide access to human resource data
The audit team must experience full access to personnel records. Some samples of relevant data are:
- Employee turnover rates,
- Discipline records,
- Annual performance reviews,
- Merit-based bonus schedules, and
- Exit interview findings.
Furthermore, if your company has set up a whistleblower hotline, allow your audit team access to data on the quantity, class and severity of tips the hotline has gathered this past year.
Make improvement efforts based on previous findings
Previous internal and external audit reports can help identify cultural risks. Together with analyzing prior reports for control failures, auditors will measure how your management team acted in response to previous findings. If, based on recommendations for the previous year, no cultural improvements were made, it doesn’t bode well for the current year’s corporate culture valuation.
Healthy cultures promote honest reporting
Corporate culture audits are an emerging area of expertise, and reported findings come in a variety of lengths and formats. Click here to contact us or call us at 818-334-8624. Our auditors know how to assist you in using these findings to reduce cultural risks and improve the reliability of your financial reporting.