At ACDO, we understand that a strong and independent internal audit function is vital to protecting the organization’s mission, resources, and reputation. Effective internal auditing ensures that operations run smoothly, risks are well-managed, and donor funds are used responsibly. The Internal Audit Unit serves as an independent and objective function, providing assurance to management and the Board that ACDO’s systems of internal control, risk management, and governance are functioning as intended.
Internal Audit Framework
Although the Internal Audit Unit is managed by a single dedicated professional, it is guided by international internal audit standards and a risk-based approach. This structure allows the unit to focus its efforts on the areas that present the highest risk and the greatest opportunity for strengthening organizational performance.
- Each year, a comprehensive audit plan is prepared in consultation with senior management. This plan prioritizes critical risk areas across Finance, Procurement, HR, Administration, Program, and MEAL, ensuring that limited audit resources are used efficiently. The plan remains flexible, allowing for special reviews or investigations when urgent issues arise.
Risk-Based Audit Planning:
- Internal audits are performed independently of the units being reviewed. This independence allows for impartial evaluations and ensures that findings are based solely on evidence and objective criteria.
Independent and Objective Assurance:
- The unit performs detailed reviews of internal controls, policies, and procedures, assessing whether they are designed effectively and operating as intended. This includes verification of financial transactions, testing of procurement and HR processes, and assessment of program expenditure controls.
Review of Internal Controls and Compliance:
- By examining red flags, monitoring potential conflicts of interest, and conducting surprise checks when necessary, the Internal Audit Unit helps protect ACDO from fraud, misuse of resources, and reputational risk.
Fraud Prevention and Detection:
Accountability and Transparency
Internal audit supports ACDO’s commitment to integrity and transparency by creating a clear link between risks, controls, and management action.
- Comprehensive audit reports are prepared for every engagement, including observations, risk ratings, root-cause analysis, and actionable recommendations. These reports are shared with senior management and discussed openly to agree on corrective actions.
Audit Reporting:
- The unit tracks all agreed actions and conducts follow-up reviews to verify implementation. This ongoing monitoring helps close control gaps and strengthens accountability over time.
Follow-Up and Monitoring:
- Internal audit works closely with donor auditors and independent external auditors by providing requested documents, explaining internal processes, and helping management respond to audit observations in a timely way.
Support to External Auditors:
Engagement with Management and Staff
Effective internal auditing is not just about pointing out weaknesses but about building capacity and improving systems.
- Audits are performed with an open, solution-oriented mindset. Process owners are engaged throughout the audit, ensuring that recommendations are practical and aligned with operational realities.
Collaborative Approach:
- When weaknesses are identified, the Internal Audit Unit provides guidance to managers and staff to help them understand compliance requirements, improve documentation, and strengthen controls. This coaching approach builds ownership and reduces recurring issues.
Capacity Building and Training:
Commitment to Continuous Improvement
The Internal Audit Unit regularly reviews its audit tools, checklists, and methodology to stay aligned with international best practices, including the Institute of Internal Auditors (IIA) Standards. Lessons learned from completed audits are incorporated into future planning, making the function increasingly responsive and effective.
Through this comprehensive approach, ACDO’s Internal Audit Unit provides assurance that the organization is operating with integrity, managing risks responsibly, and continually improving in service of its mission.