What to Do When You Find Discrepancies in Internal Controls

As an internal auditor, you might find yourself in an unexpected scenario: unearthing discrepancies in the reported internal controls of your organization. It's like opening a closet full of outdated summer clothes when winter is just around the corner. You know there’s something worth addressing, but what exactly should be your next step? Spoiler: Ignoring them, no matter how minor they seem, is not the answer!

When faced with discrepancies, your best course of action is to document them and assess their significance. Why is this so crucial, you ask? Well, here’s the thing. Documenting these discrepancies creates a permanent record, an essential reference for future audits or reviews. This record is invaluable, especially when you need to track recurring issues or present findings to management.

Now, assessing the significance of each discrepancy is equally important. Not every issue is a ticking time bomb; some may be minor speed bumps that can be rectified with a quick fix, while others may hint at significant weaknesses lurking beneath the surface. Identifying the severity helps in prioritizing actions—adopting the right approach ensures you're allocating resources where they’re needed most.

Imagine you're managing a team of workers; each has a specific role in contributing to the overall output. If one piece isn’t functioning as it should, you must decide if it’s just a minor snag needing grease or a more serious malfunction that could derail everything. Similarly, understanding the impact of your findings allows management to act swiftly and effectively, driving improvements.

This level of diligence not only preserves the integrity of the internal audit function but also fosters a culture of accountability within the organization. It’s like laying down the groundwork for a solid building—you need to ensure every stone is in place, or the entire structure may wobble.

As you move forward in your career, remember that this methodical approach will serve you well. Discrepancies should never be brushed aside or downplayed. Instead, view them as opportunities—opportunities for communication, improvement, and ultimately, strengthening the internal control environment around you.

And, while we’re at it, you might wonder if it’s necessary to alert the public immediately or take a defensive stance by only reporting when mandated. The answer lies in the careful assessment of the discrepancies. By documenting and evaluating, you gain insight into what, if any, public action is warranted.

So, next time you uncover discrepancies in your internal controls, take a deep breath and stick to your process—document, assess, and act accordingly. This thoughtful approach keeps not just you grounded in your role but also ensures the organization navigates its path to accountability and improvement with confidence and clarity. Trust in your judgment and the value of your findings. After all, every little detail plays a part in the bigger picture.