control, and governance
How Do I … Gather Information From Clients?
A significant portion of internal auditors’ daily activities consists of conducting inquiries. When handled correctly, the inquiry process helps auditors to assess risks, develop audit plans, and prepare their work programs. Moreover, inquiries often serve as a precursor to observation-based testing and are integral to the development and communication of corrective actions, as well as essential in determining whether corrective actions are effective.
Despite the importance of inquiry to the audit process, many internal audit practitioners lack proficiency in this critical skill. For some the challenge may lie in the art of inquiry, which can take years to master. For others the scientific aspects of inquiry, which require precision and consistent execution, may present difficulties. Each component requires significantly different competencies. When conducting inquiries, auditors should follow four general process stages: gaining knowledge, devising questions, making inquiries, and receiving and assessing responses.
STAGE ONE: GAINING KNOWLEDGE
During inquiry sessions, well-prepared auditors seldom need to ask questions aimed simply at obtaining general background information on client activities. Instead, they use their inquiry time to ask relevant, focused questions geared toward eliciting pertinent information.
Well-developed inquiries always begin with fact-finding. Whether questions pertain to the client’s industry, a specific employee, a division’s operations, or products and services, the more auditors know, the greater the likelihood that inquiries will be relevant to the process under audit.
STAGE TWO: DEVISING QUESTIONS
When deciding which questions to ask, auditors must consider materiality. There is little need for an auditor to expend effort on inconsequential issues when audit resources could be otherwise better deployed. Auditors should assess specifically what they expect to gain from asking each question and determine why knowing the answer is important.
While developing questions, auditors should try to anticipate possible responses. Additional questions can then be developed based on those responses to elicit further detail.
STAGE THREE: MAKING INQUIRIES
Auditors should always treat interviewees respectfully and seek to establish rapport. Clients are more likely to participate actively in inquiries that are based on mutual respect, and they become more enthusiastic about sharing knowledge if they feel comfortable with the interviewer. In addition, if participants believe they are helping to develop solutions, they may be more inclined to agree with the auditor’s recommendations.
STAGE FOUR: RECEIVING AND ASSESSING RESPONSES
Listening is not a passive process. Moreover, there are differences between a good listener and a good listening interviewer. The former requires attentive behavior while conversing, whereas the latter requires both attentiveness and critical thinking. Ultimately, the goal of attentive listening is to understand the speaker’s responses in a way that is easy to recall. Important skills include maintaining good eye contact and posture, as well as the ability to verbally summarize the interviewee’s responses.
THE VALUE OF INQUIRY
Inquiries are a critical precursor to many phases of the audit cycle. If auditors follow a systemic method when preparing for inquiries, and use a more intuitive, nuanced approach to inquiry sessions, the likelihood of an effective overall engagement will increase.
Thorough preparation and a productive inquiry session, however, are only partial determinants of the interview’s success. If auditors merely complete the questionnaires and then file them for record-keeping, great opportunities can be lost. The way in which auditors use the information they obtain is perhaps the most important part of the inquiry process.
Adapted from "The Art and Science of Inquiry" by Dion P. Koop (Internal Auditor, "Back to Basics," August 2007).
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