Beginners Guide to IT Governance Audit

Have you ever found yourself pulled in different directions by organizational priorities, only to later face the repercussions of system downtime, technical vulnerabilities, or continuity issues? As a CIO, these challenges not only impact your IT department but can also reverberate throughout the entire organization, affecting customer satisfaction and operational efficiency.

One crucial safeguard against such pitfalls is conducting an IT governance audit. By strategically assessing your IT infrastructure, policies, and processes, you can proactively identify and mitigate risks before they escalate. 

In this ultimate beginner guide, we’ll walk you through the essential steps of an IT governance audit. By the end, you’ll be familiar with the process, helping you prepare for your next audit and avoid any potential pitfalls. Let’s dive in and ensure you’re ready to handle everything confidently and easily!

What is an IT Governance Audit?

An IT Governance audit evaluates the performance and efficiency of IT processes and activities to identify areas for improvement. This includes assessing IT strategies, resource allocation, and IT systems and infrastructure reliability.

Why Is IT Governance Important?

IT Governance is important because it helps to determine if the controls in place are adequate to protect the organization’s IT assets, ensure data integrity, and align with its goals. The audit checks how well IT protection controls match organizational objectives and ensures that IT systems and devices function securely and properly while employees follow security standards.

IT audits are essential for businesses because they help answer these important questions:

• Are all our assets secure and up-to-date?
• Are we maintaining privacy and security compliance measures?
• Are there inefficiencies in our IT processes that need fixing?
• Are there any potential vulnerabilities we need to address?
• Are we adapting to evolving security needs and standards?
• Are employees following the established security protocols?
• Are third-party vendors meeting our security requirements?
• Are we effectively managing and mitigating IT risks?
• Are our IT investments aligned with our business goals?
• Are our incident response plans effective and up-to-date?
• Are we protecting sensitive customer and business data adequately?

9-Step Approach to IT Governance Audit

The 9-step approach to IT governance audit was arrived at by consulting with our internal audit experts. Let’s see them in a closer look:

Step 1: Understand Your Stakeholder Needs

Companies aim to create value for their stakeholders by balancing benefits, risks, and resource use. Information System Audits help achieve this by providing necessary processes to support business value through IT. Each enterprise has different goals, so COBIT 5 can be customized to translate high-level enterprise goals into specific IT-related goals and practices.

Note: COBIT (Control Objectives for Information and Related Technology) is a framework created by ISACA (Information Systems Audit and Control Association). This framework is essential for auditing IT systems.

To involve stakeholders in IT governance, start by identifying key stakeholders such as executives, board members, IT leaders, business unit heads, employees, customers, suppliers, regulators, and other relevant parties. Understand their interests, concerns, expectations, and influence on IT decisions.

Now, here are some of the stakeholders you may encounter internally and externally. 

Step 2: Align Your Business Structure

Begin by understanding the organization’s overarching strategies and specific business objectives. This involves understanding what the organization aims to achieve in the short and long term, such as growth targets, market expansion, product development, or customer satisfaction goals.

You need to follow 3 steps to understand your business structure, and they are:

• Determine the risks that may arise as a consequence within the organization. This includes operational risks within the firm or industry such as internal control breakdowns, cyber risks but also external risks that may affect the business such as changes in the market or regulations.

• Examine the organizational structure and how business operations are set up. This involves looking at different departments, their roles and responsibilities, and how they interact with each other. 

• Understand how IT services are supported and delivered within the organization. This includes the IT infrastructure, service delivery processes, support mechanisms, and the use of technology in day-to-day operations.

Step 3: Cover the Enterprise End-to-End

COBIT 5 is a comprehensive framework that aims to endorse IT as a part of enterprise governance systems. It prevents IT from being an independent entity that is managed on its own but rather a global aspect of the whole organization. Here’s what it covers

• Integration with enterprise governance: COBIT links IT governance with the overall enterprise governance system. This means that IT decisions, planning, and management are geared to achieving the company’s overall objectives and goals, thus making IT a value-added resource for business success.
• Comprehensive coverage of functions and processes: It includes all the functions and processes necessary for effective governance and management of enterprise IT. This includes everything from strategic planning and risk management to operational activities and performance monitoring.
• Inclusion of relevant services and processes: COBIT is relevant to internal and external IT services. This encompasses internal technology and systems and external technologies and systems available from other players in the market.

Step 4: Perform a Risk Assessment

Performing a thorough risk assessment is the next step in identifying and addressing potential vulnerabilities in both business and IT processes. Here’s how it’s typically done:

• When it comes to defining requirements, begin with a thorough analysis of all business and IT processes. It assists in identifying such threats as operational vulnerability, cyber security threats, compliance concerns, and other potential concerns to the business.
• After risks are defined, evaluate them in regard to IT factors, such as a system’s importance, risks tied to cybersecurity, data integrity factors, and the currently existing and efficient IT controls. This is useful when deciding which aspect of the business is ailing or requires attention and investment.
• Also, consider risks from a business perspective. Factors like financial impact, customer satisfaction, reputation, and compliance with regulations play a crucial role. 

Ranking Risks

In developing the risk assessment, each identified risk needs to be categorized based on its likelihood of occurring. This is commonly referred to in IT audits as ranking risk. According to the GTAG (Global Technology Audit Guide), risks are typically ranked using the scale shown below:

• H (3): High probability that the risk will occur
• M (2): Medium probability that the risk will occur
• L (1): Low probability that the risk will occur

Three types of risk factors are commonly used in assessments: Subjective, objective or historical, and calculated’:

• Subjective: This involves assessing risk and its impact using expertise, skills, imagination, and creativity. 
• Objective or Historical: This type looks at trends in risk factors, which is useful for organizations with stable operations. 
• Calculated: These factors are derived from historical or objective information.

These classifications help auditors and organizations understand and prioritize risks in the best possible way. 

Step 5: Plan the Audit Process

Before any audit activity, planning is a very important factor that needs to be addressed. Besides, it helps the audit team be well-equipped with knowledge of the organization’s IT governance framework, especially in areas that are vital to the success of the organization. Here’s how you can go about planning the audit: 

• Choose Audit Subjects: Start by selecting the specific areas or subjects to be audited. These could include IT security, data management, compliance with regulations, or any other important aspect of IT governance.
• Group into Audit Actions: Suggest ways of categorizing these subjects into specific audit actions. This can help bring some form of organization and order to an audit and guarantee that all sections are accorded adequate time.
• Establish Audit Cycle and Frequency: Decide the time intervals for the audits and consistently do so. Depending on the organization’s schedule and the IT capabilities’ nature/size/complexity, this could be quarterly, annually, or as required.
• Attach Appropriate Actions: Based on management requests or opportunities for consulting, attach specific actions to each audit subject. This might include in-depth analysis, testing of controls, or recommendations for improvement.
• Confirm the Plan with Management: Last but not least, communicate the audit plan and strategies to management to coordinate the activities according to the organization’s expectations and respond to any concerns or recommendations that they may wish to present.

Step 6: Preparation for the Audit

Preparing for an audit requires more than just having a checklist as internal documentation. The goal of this preparation is to deeply understand the weaknesses in your infrastructure and create specific, actionable steps to address them effectively. To achieve this, relying solely on paper checklists and clipboards is insufficient.

Hence, start by gaining a thorough understanding of your infrastructure’s vulnerabilities and potential risks. This involves identifying current weaknesses and also anticipating future challenges that could impact your operations.

Step 7: Implement Sophisticated Systems

There is much that needs to be done to ensure audit readiness in light of this and more needs to be done to set up a complex system for audit readiness. This includes tools or applications inherent in the audit process that suffice for data gathering, processing, and presentation. 

They assist in the management of the collected information, the control of the progress in work, and the compliance with the audit standards.

For example, Sprinto is GRC preparation software for security audits. It takes care of logs, documentation, and system snapshots so that you can be aware of your preparedness for audits. 

The control is always with you when using Sprinto, which allows you to engage in evidence reviews with auditors, perform due diligence without delays and enjoy efficient work.

Within Sprinto, you can plan audits, monitor compliance, and assess audit readiness within designated timelines. The platform continuously tests controls, identifies anomalies, and manages alerts to uphold compliance standards. 

It automates the collection of accurate evidence and documents it for review, simplifying the audit process. With Sprinto’s expert support, you can address any