There are a variety of reasons, both internal and external, why an organisation might need to tighten its grip on its finances. We look here at a menu of points that a CAE might consider to ensure that internal audit creates and protects organisational value through risk-based and objective assurance, advice and insight. What would you do?

Put yourself in the shoes of the CFO

When times are tough, the mantra that “cash is king” is often heard within a finance department. It is the harsh reality that determines liquidity and financial sustainability.

On a regular basis, it is a worthwhile exercise as CAE to spend twenty minutes or so thinking about the organisation from the perspective of a CFO. The value of this increases considerably when costs are under pressure.

What are the biggest risk concerns?

How long can an organisation survive?

Which areas present opportunities for exploitation and which can be sacrificed?

The skills and knowledge across the internal audit team should make it possible to undertake a cash leakage exercise: mapping out the key processes of the organisation and where leakage may be occurring. If there isn’t time for this, what about the instinct across the team? Identification of quick wins (issue and solution) have the potential to stave off restructuring together with the associated costs and upheaval. Revisiting processes could also better position an organisation to take advantage of opportunities either immediately or post-recession.

The supply chain is a key area to look at due to its complexity with multiple systems, workflows and geographies can be a rich source of cash and value leakage. Are short shipments identified? How accurate are stock files? Could damages be reduced? What additional recovery could be obtained from returned and obsolete stock?

It is not just physical stock that…