Magazine article Security Management

A Day of Reckoning

Magazine article Security Management

A Day of Reckoning

Article excerpt

AN INTERNAL AUDIT PROGRAM IS an excellent way for a company to find out whether departments or facilities are complying with company policy and whether they are using sound business practices and recommended operating procedures.

Before a company implements an audit program, it should decide on the program's expectations and goals. Decisions about what actions to take if a department is not in compliance should be discussed before the program is implemented. And management needs to decide which department will conduct audits--the accounting department, the security department, or both.

For this article, the assumption will be made that the audit responsibility falls under the jurisdiction of the director of security.

An audit should have three components: a formal investigation process, the exit interview, and the report. The format of the audit can vary.

THE SURVEY CAN BE PERFORMED USING A checklist, a fill-in-the-blank form, or a detailed report tailored to each facility. Some companies use a combination of formats.

Tho checklist audit. The checklist audit format is the easiest to perform and review. It is not, however, the most interesting to conduct or read.

This type of audit is comprised of a list of standards the company thinks each facility should comply with and the policies and procedures that should be used to accomplish these required tasks.

As the auditor walks around the facility, he or she fills in the form by checking a "yes" or a "no" to indicate whether a facility is complying with company policies.

Although the checklist audit gives the company some measure of how management at the facility is performing, this type of document is difficult to quantify because it relies totally on the auditor's observation.

It is also hard to measure items against each other. For example, not complying with cash handling procedures is far more damaging to a unit than not breaking down boxes before they are thrown in the trash. Yet, both carry equal value on the form. In reading the final report, management tends to ignore the "yes" answers and concentrate on the "no" answers.

The fill-in-the-blank audit. This type of audit format provides a standard form, as does the checklist, but instead of checking a "yes" or "no," the auditor writes comments.

An example of this type of audit used by one retail company was designed to determine the proficiency with which refund forms were being completed.

The audit form was made up of a line listing for each section, box, or blank on the refund slips plus a listing of the required procedures. In this case, procedures included attaching the original sales slip to the copy retained at the service desk, validating the slip at the register where the slip was redeemed, and accounting for all refund books in the store via a log.

The auditor merely counted the number of completed refund slips and entered the total. Then for each section, the total number of slips on which that section was left blank was listed.

This type of audit is tedious, time-consuming, and usually reveals a number of exceptions. In this instance, most managers thought the audit was a waste of time.

However, the overall objective was to ensure that the paperwork was being completed properly, so the audit proved effective. By concentrating on each blank on the form, the habit of completing paperwork accurately was developed. This, in turn, allowed the security department and auditors to go back later and establish an accurate paper trail to check for fraudulent refunds.

An effective audit relies on the accuracy of the paperwork documenting the business transaction. Both the checklist and fill-in-the-blank audits are easy to use. The auditing document becomes the audit report, and neither requires much, if any, documentation.

The formal audit. A formal audit is one where the auditor performs a check of all operations in a facility and then writes a report detailing the problems. …

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