- 1 PHASE 1 to 4: INTERVIEWING
- 1.1 Introduction
- 1.2 What is an Introductory Survey and what is its purpose?
- 1.2.1 Entry Interviews or Introductory Surveys
- 1.2.2 What are the activities performed during the Introductory Survey?
- 1.2.3 What skills are required for the Interview?
- 1.2.4 What preparation is required for the Introductory Survey?
- 1.2.5 Conduct of the Entrance Interview(s)
- 1.2.6 How should the meeting be documented?
- 1.3 Midpoint or During Project Interviews
- 1.4 Exit Interviews
- 1.5 Interview Techniques
- 1.6 Backlinks
PHASE 1 to 4: INTERVIEWING
When conducting an audit, Internal Audit interviews client management to obtain both qualitative and quantitative information. Ultimately the objective is to elicit frank, complete and honest answers from client management who have more information about a particular audit area than Internal Audit.
There are three major types of interviews in the conduct of an audit. They are:
- Entry Interviews (Introductory Survey)
- Mid-Point Interviews or During Interviews
- Exit Interviews
Conducting a successful interview requires careful preparation. Some of the major steps to be taken by Internal Audit during preparation are to:
- Perform background research as this allows Internal Audit to became familiar with the client management's policy and terminology relating to the audit area
- Identify those personnel within the audit area who can provide accurate information
- Identify clearly the objectives of the interview and make a list of the information to be sought during the interview.
- Prepare an agenda for the interview so the interviewee can adjust his/her answers to the time available for the interview, and to assist the interview stay on track.
What is an Introductory Survey and what is its purpose?
Entry Interviews or Introductory Surveys
The preliminary survey, is the initial interview(s) with the key personnel (and arguably each of the personnel, key or not) with whom the internal auditor will be dealing with during the review. The Entrance Interview, the first phase of the preliminary survey, generally refers to the interview(s) during which the scope and purpose of the audit are finalised, and the initial introductions are made. Entrance Interviews are discussed below.
The main purposes of the preliminary survey are to convey to each of the personnel the objective of the review, and address any concerns the staff may have either about the review, its conduct and their relationship with the auditor.
What are the activities performed during the Introductory Survey?
The first activity during this phase is an entrance interview with the senior personnel of the area in which you will be performing the review. This entrance interview is to:
- outline the objectives of the review;
- determine or confirm the scope and boundary of the review;
- convey to the senior personnel the approach you will be taking during the review;
- identify any particular problems or concerns which the senior personnel have and which they would like the internal auditor to review; and
- determine the timing of the review and the anticipated dates for issue of the draft and final reports.
The second activity is to get the senior personnel to introduce the internal auditor to the personnel with whom the internal auditor will be dealing during the course of the audit. The appropriate introduction of the internal auditor by the director or other senior officers will lend authority to the audit, emphasise the client-consultant relationship between Internal Audit and management, and help ease the officers' traditional concern regarding auditors and the audit process.
It is important at this stage of the audit to gain the confidence of the personnel with whom we will be dealing by conveying that we are not performing a "witch-hunt" (unless, of course, we actually are !), rather we are there to assist them by observing their concerns and problems and identifying solutions or recommendations to overcome or compensate for them. We should also convey that in discussions of faults in operations or systems we first focus our comments on the systems themselves rather than criticising personel in our report. Further, in reporting we attempt to argue both sides of a question, and we will seek there assistance if necessary to help explain the advantages of the current approach or their suggested solutions and improvements. The role of the auditor as a facilitater should be emphasised.
Generally this approach helps overcome the apprehension an auditee may have about the audit. The sooner the auditee is working with us rather than against us, the more thorough and effective the audit will be.
We should see our role in the control system as having elements of all three classes of control:
|Preventive||Analysing the potential for error, encouraging general staff and management to think in terms of control, and encouraging auditees to see us as assisting their work by reducing errors and minimising wastage of effort.|
|Detective||Identifying when errors and control systems failures are occurring and identifying the causes and solutions.|
|Corrective||Reporting the findings and recommendations in such a manner as to have them accepted and implemented by both the management and the staff.|
This state of mind should be communicated by:
- attitude, and
What skills are required for the Interview?
Here is an incomplete list of what the internal auditor needs to be:
- objective and independent;
- respectful and polite;
- friendly (not overbearing);
- able to obtain the officer's confidence and respect immediately - first impressions are always the most important;
- able to ask questions (open-ended) which will lead to the officer answering in the most productive manner;
- able to argue his case by directed questioning;
What preparation is required for the Introductory Survey?
The internal auditor should obtain and read as much information as they can about the section or area in which they will be performing the review. This information could include:
- the Department's/Corporate's/Division's/(Etc.) Annual Report;
- the Department's/Corporate's/Division's/(Etc.) Organisation Chart;
- internal reports and memorandums;
- previous Internal Audit reports and resultant Action Plans;
- the external auditor's audit reports and other correspondence;
- the Department's/Corporate's/Division's/Section's/Unit's procedures manuals;
- relevant legislation; and
- any management briefings provided.
Conduct of the Entrance Interview(s)
At the entrance interview, Internal Audit will meet the client management and discuss:
- Internal Auditors - who are we, how do we fit into the organisation
- Issues regarding our compliance with the various Internal Auditing Standards
- The Internal Audit staff that will be conducting the audit
- The nature of the proposed audit, i.e. whether it is a compliance or efficiency audit
- The audit objectives
- The audit scope and assertions (including discussions of the issues to be covered during the audit especially client concerns)
- The audit methodology
- The concept behind the assertions used during the audit
- Boundary of the audit i.e. whether it is being conducted in a number of States/regions
- The date of commencement of the audit
- The approximate time of the conclusion of the audit
- The importance of relevant client officers and documents being readily available to avoid increasing the time of audit
- Acceptance of scope and objective of audit by client management
- The issue resolution approach involving discussions with the client management when the field work is completed or during the course of the audit if that is appropriate
- Resources which Internal Audit may require from management, i.e., accommodation, etc
- Reporting arrangements
- Actions to be taken when a fraud or significant malpractice is discovered.
How should the meeting be documented?
The proceedings of the meeting should be documented by the internal auditor. This should include the following:
- date and time of meeting;
- matters discussed including the scope and boundary of the review, timing of the review and release of the draft and final reports, administrative needs (such as an office, photocopier etc, and concerns and problems raised by the senior personnel;
In addition, any major changes in policy, operation or organisation and or applications and issues management advises Internal Audit of should be documented. Similarly if Internal Audit has ascertained the status of recommendations from a previous audit or ANAO should also be documented.
Midpoint or During Project Interviews
It will usually be desirable for a formal or informal interview to be held with client management i.e. Director, specialists, operating staff of the relevant audit area to:
- Discuss the progress of the audit
- Discuss tentative findings and invite auditee's comments
- To conduct survey and/or questionnaire where applicable
- To identify appropriate staff to obtain relevant documentation and information
Document the outcome of the interview as part of the working papers of the audit.
The backbone of the SBA is the data collection/systems documentation process performed through interviews. A well conducted interview program, probably based arround processing cycles and systems walkthroughs can provide the majority findings ultimately reported (after collaboration by testing and systems analysis).
A rule of thumb for conducting such interviews is to:
- Identify cycles in the staff members duties (yearly, quarterly, monthly, weekly, daily, etc) and the tasks and durations associated with those cycles.
- For each task relevant to the audit, conduct a systems walkthrough collecting example blank and completed control documentation and exploring branches in the process for the full range of options at each step.
- Trace a single path to its end, and then backtrack to each preceeding major branch where alternative options are possible.
Your narration of the interview should cross reference to the sample documents collected and numbered during the interview.
Interviewees should be encouraged to talk freely as they will often be aware of the problems in an area, but not of there importance to our analysis.
At the conclusion of the audit, Internal Audit will request for an exit interview with the client management to discuss the draft audit findings and to resolve any discrepancies or differences.
Some audits cover a program or activity encompassing more than one of the Department's State/Territory Offices. It may be necessary or desirable to hold separate exit interviews in each office, although the need for this should be carefully considered. Where issues to be discussed are non-contravertial or non-confidential, or the interview is expected to be a formality, consideration should be given to arranging single exit interview which could be attended by representatives of each area or region affected by the audit.
It should be remembered that the larger the group of people the more difficult the interview will be to manage.
At the interview Internal Audit should discuss with the client management:
- audit findings; both positive and negative
- the impact of the audit on the audit area
- results of testing
- audit recommendations
The client management is invited to comment on the validity of the audit findings and the appropriateness of the recommendations. The client management should challenge the audit findings and recommendations if it finds them to be inaccurate, unreasonable or unsubstantiated, but it should be in a position to support its arguments.
Internal Audit should document:
- agreements, disagreements and discussions of the interview
- actions to be taken
- items to be deleted and/or amended
After the exit interview, Internal Audit will issue the client management a draft report communicating the principal audit results. The client management is given 10 days to respond to the draft report with management comments. The management comments will be included in the final report.
Where Outlet Audits are concerned, at the completion of the field work the auditor discusses and supplies the draft copy of the audit findings to the client management incorporating auditee's comments. This allows client management to be prepared for the exit interview and provide opportunity for the client management to confirm and agree on the findings.
Notifying Client Management of Exit Interview
Internal Audit will forward a minute formally advising the client management on the:
Five days before the exit interview. The Internal Audit minute should also include discussion papers so that the client management can fully discuss the issues raised.
The Exit Interview is Part of The Audit Control System
The discussion of the administration of the Exit Interview (Sect 5.9.1) makes the interview sound quite cut and dried. This is missleading.
The Exit Interview should never operate in adversarial mode. It is a part of the consultative process which Audit undertakes when it conducts an Internal Audit for management.
The Interview is best driven by Management, not the auditor. This means that while the auditor might establish an agenda, and keep the meeting moving, management determines about what they wish to talk.
The underlying aim is for audit and management to come to an agreement over the nature, presentation of and approach to the findings of the review. Seating, atmosphere and conversational approach must all be set so as to relax both the auditor and the client management. We should aim to facilitate an atmosphere to give management every confidence in saying what they wish. Situations where the auditor is in a dominant or overbearing situation should be avoided.
We must always remember that the fundamental purpose of the audit is to:
- Bring about excellence in systems design and operation.
To achieve this we need the cooperation of management because they ultimately have to act on our findings for the improvement to be realised. The exit interview helps establish management ownership of the recommendations. This boils down to a win/win result for Internal Audit and Management.
Guidelines to the conduct of exit interviews are presented in Appendix E Conduct of Exit Interviews.
The Technical Libraries as well as libraries in general contain many texts and other publications on interview techniques and procedures. These texts should be periodically reviewed to ensure audit interviews remain productive and are properly conducted.