A Quick Guide to Internal Audit Process

Most organizations treat internal audits as a formality, something you rush through before the real audit begins. But skip it or do it poorly, and you’re walking into your external audit blind: controls untested, gaps undetected, and your team scrambling to explain findings that should have been caught months ago.

This guide breaks down how the internal audit process actually works — from scoping and fieldwork to reporting and closure — so you can stop reacting and start getting ahead.

What is an internal audit?

The internal audit process is a structured self-assessment of an organization’s internal controls, risk management practices, and operational compliance. It typically follows four phases:

1. Planning: defining audit scope, objectives, and responsibilities
2. Fieldwork: testing controls, interviewing staff, and reviewing documentation
3. Reporting: documenting findings, risks, and corrective recommendations
4. Follow-up: verifying that identified gaps have been addressed

Types of internal audits

The different types of internal audits are financial, operational, compliance, IT, investigative, integrated and environmental. Each of these types have their own purpose and relevance depending on the nature of organization.

Here are the 8 types of internal audit:

1. Compliance audit

A compliance audit is a comprehensive review of an organization’s adherence to external regulations, internal policies, and industry standards. The purpose of the audit is to ensure that the current protocols, documentation, and controls are sufficient to meet the compliance requirements.

2. Penetration audit

In this type of information security audit, a tester simulates an attack from inside an application’s firewall.

Unlike compliance audits, penetration tests mimic real-world attacks to find vulnerabilities that could be exploited. Although they’re pricier and take more time, they provide a thorough assessment of an organization’s security posture.

3. Risk assessment audit

Risk assessment audits concentrate on spotting potential threats and gauging how likely they are to happen. While they’re good at finding possible security issues, they might not capture the full security picture of an organization. Risk assessments tend to take more time and cost more compared to other types of audits.

IT audit is a rigorous evaluation of an organization’s IT ecosystem including policies, processes, controls and systems. During the audit, the capabilities of the entire IT architecture are examined for maintaining the confidentiality, integrity and availability of the organization’s information assets.

4. Investigative audit

This is a special type of audit that is only carried out when situations like fraud, misconduct, complaints etc. arise. Investigative techniques are applied to find out the truth about the allegations and the impact of the situation. This is then followed by corrective actions and recommendations. (also check for limitations of internal controls in audit)

5. Performance audit

Performance audit measures the performance of the organization against the set performance benchmarks. It evaluates the effectiveness of invested resources, set practices and the current processes in achieving better results for the organization.

6. Integrated audit

An integrated audit is the combination of two or more types of audits for a consolidated and unified review. For example, a compliance audit may be combined with an IT audit to examine the strength of internal controls from both security and compliance point of view.

7. Environmental audit

Environmental audits look into the direct and indirect impact of an organization’s activities on the environment. This could include checking the waste generation, disposal methods for hazardous materials, habitat destruction, polluting activities, etc.

Why do organizations need to perform internal audits?

Organizations need to perform internal audit because they give visibility on control effectiveness, validate the progress and ensure continuous improvement. Going straight for an external audit without performing an internal audit would mean additional audit time and costs, dangers of non-compliance and missed opportunities for growth and enhancement.

Here’s why businesses must go through internal audits:

Helps ensure strategic alignment

Internal audits help make sure that policies and controls implemented are as planned and have no gaps in them. They give an objective insight into organizational trajectory by bringing both thriving and faltering areas into notice. This helps understand opportunities for growth and upcoming challenges.

Proactively identifies potential risks

Internal audits are often seen as a part of risk management plan as they involve revisiting processes, people, documents, and controls to identify vulnerable areas. Risks are identified before they become potential hazards saving time and resources that would have otherwise been spent in firefighting.

Identifying vulnerabilities and addressing gaps is one of the primary components of a security program. Sprinto offers full-fledged compliance security, all in real-time, all from a single dashboard. Get in touch to learn more.

Uncovers compliance gaps

Internal audit require examining any deviations from compliance requirements. This expedites the initiation of corrective action that may be required and improves the organization’s readiness for certification processes. It also results in external auditors spending less time moving back and forth requesting remediation.

Litmus test for internal control effectiveness

Internal audits help test whether the internal controls are working as intended and are effective in protecting against potential threats. It assures the organization that its security muscle is well-trained and helps build trust in the eyes of stakeholders and customers.

Ensures Continuous refinement

Security and compliance are ongoing endeavours. Internal audits help the organization stay vigilant and ensure improvement on an ongoing basis. Well incorporated feedback from internal audits can help the organization adapt to the emerging threat landscape and respond effectively.

Frameworks like ISO 27001 require organizations to plan and implement internal audits at frequent intervals for its own security and continuous improvement.

How to conduct an internal audit?

Every internal audit follows the same underlying logic: define what you’re testing, test it, document what you find, and make sure the gaps get fixed. The process runs in four phases: planning, fieldwork, reporting, and follow-up, each with specific steps that move you from scope to closure.

Phase 1: Planning

Planning is where you lay the groundwork. A vague scope produces vague findings, so the objective here is to be specific about what you’re auditing, why, and how before anything else begins.

Step 1: Define the scope

Decide what’s being audited: a department, process, system, or specific compliance requirement. Prioritize areas that are high-risk, have changed recently, or need to be validated ahead of an upcoming external certification.

Step 2: Build the audit plan

Translate the scope into a concrete plan. Identify the standards or regulations you’re measuring against, assign auditor responsibilities, set a timeline, and document the procedures you’ll follow during fieldwork.

Step 3: Choose a framework

Select an audit framework that fits your objectives. For broad GRC and governance coverage, use the IPPF or COSO framework. For IT-focused audits, COBIT is a strong choice. For financial controls, SOX is the standard. Your framework shapes what you test and how you interpret findings.

Step 4: Build an audit checklist

Create a checklist aligned with your scope and framework that covers the controls to test, the evidence to collect, and the key questions to answer. Are controls documented and followed? Is access managed correctly? Is operational evidence current and available?

Step 5: Notify relevant teams

Give the departments being audited enough notice to gather documentation and evidence. The goal is an accurate picture of your control environment, and that requires preparation on both sides.

Phase 2: Fieldwork

Fieldwork is where the actual audit happens. You’re testing whether controls work in practice, not just how they’re documented on paper, and the gap between the two is exactly what you’re looking for.

Step 6: Conduct fieldwork 

Fieldwork runs across three core activities:

• Inspection and observation: reviewing policies, documentation, and live processes on the ground
• Employee interviews: assessing whether staff understand and follow the controls they’re responsible for
• Control testing: running tests to verify controls are operating as intended, not just written down

Phase 3: Reporting

Reporting turns fieldwork into findings. A good audit report doesn’t just document what went wrong; it tells stakeholders exactly what needs to change, how serious each gap is, and who’s responsible for fixing it.

Step 7: Report findings and recommendations 

Compile findings into a structured audit report covering what was tested, what gaps were identified, the risk level of each finding, and specific remediation recommendations. Vague findings produce vague fixes. Specificity here is everything.

Phase 4: Follow-up

Follow-up is what makes the audit worth doing. Findings without remediation are just documentation. This phase closes the loop between what was identified and what was actually fixed.

Step 8: Track corrective actions 

Assign owners to each finding, set remediation deadlines, and actively track progress. Don’t wait for the next audit cycle to find out whether gaps were addressed.

Step 9: Close the audit

Once corrective actions are verified, prepare a closure report summarizing resolved and outstanding findings. Document lessons learned, and share the final outcome with your audit committee or relevant stakeholders so the next cycle starts with full context.

What should you do post-internal audit?

Following the completion of an internal audit, you need to deal with any identified gaps immediately. To stay organized after the audit, create an efficient corrective action and monitoring plan. This post-audit plan will include the internal audit findings, their priority, current status, corrective action, completion schedule, and the party responsible.

However, you need to hold a follow-up audit after the first one to increase the chances of success in external auditing.

After the internal audit, here’s a simple checklist you can follow:

• Auditors meeting: Invite the internal audit team to talk about the nonconformances or missed aspects
• Timely audit report: Get the audit report
• Encourage corrective actions: Motivate the employees to correct the identified mistakes
• Guidance on corrective actions: Get advice on the corrective actions and make realistic timelines

How to automate an internal audit?

Automating an internal audit involves mapping your existing workflow to identify repetitive tasks, selecting the right tech stack (such as GRC platforms or no-code tools), and replacing manual sampling with continuous, 100% data analysis. This shifts auditors away from tedious paperwork toward high-value, strategic risk analysis.

Automation solves the operational side of an internal audit. Here’s how to do it:

Step 1: Connect your tech stack

Start by integrating your compliance platform with the tools your organization already runs on such as cloud infrastructure (AWS, GCP, Azure), identity providers (Okta, Google Workspace), HR systems, dev environments, and access management tools. These integrations are what make continuous, automatic evidence collection possible.

Step 2: Map controls to your audit framework

Use pre-built control frameworks instead of building from scratch. A good compliance platform comes with templates mapped to common standards like SOC 2, ISO 27001, GDPR, HIPAA, so your controls are already aligned to what an auditor will look for before fieldwork even begins.

Step 3: Let evidence collection run continuously

Once your stack is connected, evidence pulls automatically from your systems in real time. No manual uploads, no chasing teams for screenshots, no rebuilding context at the last minute. By the time your audit window opens, your evidence workspace is already populated.

Step 4: Monitor controls in the background

Automation watches your controls year-round; not just during a formal audit cycle. Drift, misconfigurations, and failing checks get flagged the moment they appear, so gaps are caught and fixed on your terms rather than discovered by an external auditor.

Step 5: Surface findings and assign corrective actions

As gaps are detected, findings are documented automatically in a structured format. Corrective actions are assigned with owners and deadlines inside the same platform, and progress is tracked without manual status updates or follow-up emails.

Step 6: Run the formal audit

When it’s time to conduct the internal audit, most of the work is already done. Your team reviews findings rather than producing them which means the formal audit takes hours, not weeks.

With Sprinto, all six steps run from a single platform. Navigate to Security Hub → Reviews → Internal Audit → Run, select your evidence date, and your assigned infosec officer walks you through the rest.

What do you need to perform an internal audit?

A successful internal audit needs the right inputs before fieldwork begins. Here’s what that looks like:

• A defined scope and objectives: Know what you’re auditing and why before anything else. A vague scope produces vague findings, and vague findings don’t fix anything.
• A qualified auditor or audit team: Internal audits need someone independent of the function being reviewed, a dedicated auditor, compliance officer, or appointed team with working knowledge of the relevant frameworks and processes.
• A framework to measure against: Every audit needs a benchmark. IPPF or COSO for broad GRC coverage, COBIT for IT-focused audits, SOX for financial controls, and ISO 27001 for information security. Your framework defines what good looks like — and what falls short of it.
• Access to documentation and systems: Auditors need access to policies, procedures, system configurations, access logs, and operational records relevant to the scope. Without it, fieldwork stalls and findings are incomplete.
• Stakeholder cooperation: Audits only work if the teams being reviewed participate honestly. That requires leadership buy-in, advance notice to relevant departments, and a culture that treats findings as opportunities for improvement, not indictments.
• A system for tracking findings and corrective actions: Whether it’s a compliance platform or a structured tracker, you need a way to document findings, assign owners, set deadlines, and follow up. An audit without a follow-through mechanism doesn’t improve anything.

What is the difference between internal and external audit?

An internal audit is a self-examination of an organization’s internal controls and processes by its own employees for identifying improvement areas and enhancing performance.

External audit is an independent and objective assessment of an organization’s systems, processes, controls, and documents by an external auditor to ensure conformity with applicable regulations.

They both align in purpose when it comes to ensuring the accuracy of financial reporting, robustness of internal controls and compliance with regulations. But there are other considerable differences worth noting.

Here’s how internal audits and external audits differ:

Basis	Internal audit	External audit
Who conducts it?	Internal auditors who are also employees of the organization	External auditors who are independent third-parties
Auditor selection	The management can choose the internal auditors based on expertise and experience.	The management can select an audit firm but not decide the members
Focus	The focus is on reviewing the current policies, processes and controls for operational efficiency and preparing for external audits	The focus is on evaluating the strength of internal controls in meeting the compliance requirements
Objective	Improving internal practices and controls	Meeting reporting requirements of regulatory bodies
Mandated by law	No	Yes
Formal opinion	Internal audits may not result in formal opinion	A formal opinion is given in external audits
Report use case	Management	Stakeholders and regulatory bodies
Period	Could be conducted on an ongoing basis or frequently	These are conducted annually in most cases

What are the 5 C’S of the internal audit process?

The 5 C’s of the internal audit process are criteria, condition, cause, consequence and corrective action. They dictate the requirements of internal audit reports and are crucial in answering all the what, why and how.

Here’s what each of them lays out:

1. Criteria

Criteria refers to the standard or the basis for internal audit. It answers the following question: What is the benchmark against which the performance evaluation will take place? Details on the purpose of conducting the audit and the party who requested the audit are also specified under the criteria.

2. Condition

Condition pinpoints the current state of affairs in the organization that demand an internal audit. The auditor will evaluate the conditions with respect to the set criteria to provide insights on where the organization falls short and where it meets the criteria without fail.

3. Cause

Cause highlights the underlying source of the conditions. What led to the deficiencies or non-adherence in the first place, it aims to answer. Identification of the cause is critical for eliminating the core issue and solving at a deeper level.

4. Consequence

Consequences are the current repercussions or possible implications of the identified conditions. These could be financial, operational, reputational, legal or environmental consequences. The severity of these conditions is then analyzed for prioritizing and deciding the future course of action.

5. Corrective action

Corrective actions are the recommendations for solving the underlying issues. It talks about the collective efforts that will be required from people, processes and technology to remediate the prevailing conditions and meet the set criteria.

Who performs Internal audit?

Internal audits are performed by Internal auditors. Internal auditors are skilled professionals hired by organizations to provide an unbiased view of organization’s current controls and highlight areas of improvements.

The internal auditor is a part of the internal audit department which is answerable to the Board of Directors or Audit Committee.

Run internal audits continuously with Sprinto

Sprinto is an Autonomous Trust Platform that keeps your internal audit program running in the background, continuously monitoring controls, automatically collecting evidence, and flagging gaps in real time. Pre-built compliance checklists, automated risk assessments, and built-in remediation tracking mean your team walks into every audit cycle with the work already done.

Real-time visibility into your security posture means stakeholders always have an accurate picture, not a quarterly snapshot that’s outdated the moment it’s shared.

Hear it from our auditor network–how Sprinto makes the audit process easier

Our super-professional and responsive team will help you get started. Talk to them today.

FAQs