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IT Audit | Step-by-Step Guide

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@basquillatconsultingBasquillat Consulting

Specialist in drafting templates for IT policies and procedures

In 2020, an IT audit is important for all organizations. It provides insights into the business’ IT infrastructure and how it can be improved.

In general, an audit sounds quite scary.

Who wants to get a letter from the IRS about opening an audit into your financial accounts?

However, an IT audit is different. Organizations hire IT auditors to analyze their organization’s IT infrastructure to see if everything is up to par. It’s mostly the executives, in particular, the CEO, COO, and CFO that request an IT audit.

IT audits are mostly conducted because people on an executive-level don’t know what exactly is happening in their IT department. Whether the business is outsourcing its IT tasks or have an internal IT team.

If things are not looking up in the IT department lately, or there have been a lot of downtimes, then it’s time for an IT audit!

In this article, we will discuss about:

  • What is an IT audit
  • Importance of an IT audit 
  • Components of an IT audit
  • How to prepare for an IT audit
  • IT audit process
  • What is the outcome of an IT audit?

What is an IT Audit?

IT audit, also known as, information system audit is the examination of an organization’s IT infrastructure, policies, and procedures.

IT audits started in the mid-1960s and have gone through several changes. They play an important part in keeping an organization’s IT policies and procedures up-to-date.

Importance of An IT Audit

Every business needs an IT department. It may be an internal team, remote team, or maybe you outsource your organization’s IT tasks.

In any case, the threat of cyber-sabotage is real. A cybercriminal can steal your data, and ruin your enterprise’s reputation leading to a major loss.

In the information age, data is your biggest asset. Unlike physical assets, you cannot protect data by building walls and safes. Cyber threats are like Trojan horses, appearing friendly, but holding surprises.

However, the threat does not necessarily come from outside. It can also be internal. Like an employee misusing or mishandling IT equipment. For example, a phishing attack can happen if an employee clicks on an insecure link on their work computers.

In conclusion: technology is vital AND vulnerable!

What your business needs, is someone to analyze the complete IT infrastructure and make sure that your assets are safe. Remember, the integrity of your IT system can be the difference between success and failure!

Components of an IT Audit

IT audit can be broadly divided into two types:

  • a. IT General Controls (ITGC): they exist to assure the integrity, availability, and confidentiality of data. These are the basic controls applied to IT systems including applications, operating systems, databases, and support.
  • b. IT Application Control (ITAC): it’s a security measure put in place to restrict unauthorized applications from putting the system and data at risk. The ITAC includes identification, authorization, authentication, input controls, etc.

More specifically, the five categories of IT audit are:

  • System and Application: this audit focuses on the system and application in an organization. It verifies that the system and all applications are efficient, appropriate, reliable, up-to-date, and secure on all levels.
  • Information Processing Facilities: It verifies that all processes are working efficiently, accurately, and timely, in both normal, and rather disruptive conditions.
  • System Development: this audit verifies that the under-development system is aligned with the organization’s objectives. It also makes that the system is made per the generally accepted standards for systems development.
  • Management of IT and Enterprise Architecture: it ensures that IT management is structured and the information processing environment is
    efficient and controlled.
  • Client/server, Telecommunication, Intranet, and Extranet: this audit focuses on telecommunication controls. It ensures that proper measures are in place for the server, client, and network connecting the server and the client.

Purpose of IT Audit

The purpose of an IT audit is to evaluate the effectiveness of an organization’s IT system.

Installing controls keeps everything in check, but is not enough in the long-term. It’s important to make sure that the proper controls are installed and working as intended. If it’s not, then how can we handle the situation and prevent future breaches.

With the way technology is advancing, we also need to consider its impact on information security. It’s important to check if the controls put in place a few years ago, is still efficient and enough.

In an IT audit, all these questions are answered by an unbiased and independent entity. The auditors are auditing the information system. In an information systems environment, the audit is the evaluation of the information system, inputs, processing, and output.

An IT audit evaluates three major aspects of an information system:

  1. Availability: will the information system be available when the users need it?
  2. Integrity: will the information system be reliable, accurate, and prompt?
  3. Confidentiality: will the information in the system be restricted to authorized parties?

How to Prepare for an IT Audit?

In organizations, people often ask how to prepare for an IT audit. If there is anything we can do to make the process go smoothly.

If you have an upcoming Audit and want to prepare for it, then here are a few steps to ensure a stress-free IT audit.

Notify All Internal and External Partners

The first step in an IT audit is to notify the external and internal partners that an audit is coming. It includes all the stakeholders, management, and support. The whole team should be ready to provide any documentation or details that the auditors request. 

You should notify all departments and ensure that everyone’s ready to make the process go smoothly.

A great way to make the audit process go smoothly is to make a list of all IT individuals and management who can be relied on to deliver.  individual
beforehand that you might need assistance during the audit.

You can also conduct surveys to ask the staff about any IT-related issues and their severity.

Step 1: Create an IT Asset Inventory

An IT audit is all about IT assets and securing them. Creating an Inventory of all IT assets in your organization can put everything into perspective. The  IT assets include both hardware and software resources that are used in everyday operations.

Along with IT assets inventory, you should also keep the access linked list handy. It should be easier for auditors to have immediate access to your system.

To make this work,  create a list of login credentials for all software and hardware resources involved in the audit process. Also, in terms of physical access in the building, auditors should be able to freely visit various parts of the property.

Step 2: Ask Your Auditor for a Document Checklist

During the IT audit,  the auditors will request various documents at different stages.  keeping a list of all important documents in your organization will come in handy.

Ask your auditors to provide a list of all documents that they may need and get your documentation right. Having all important documents in a central location can save both you and your auditor a lot of time and trouble.

The documentation entails all contracts with third-party service providers and external vendors.  The list should also include purchase and warranty documents of your IT infrastructure. Knowing how old your equipment is
crucial in several ways.

You should also have a log of the administrative written policies and procedures in one place.

Step 3: Prepare Your Financial Statements

A primary reason why most organizations conduct an IT audit is to reduce the operational cost of their IT infrastructure. To reduce costs, you must create a financial statement covering all expenditures related to the IT
setup.

When the auditors have a complete picture of your finances and expenditures, they can make suggestions about reducing operating costs and increase profit.

Step 4: IT Policies and Procedures

Before conducting an IT audit you need well-documented IT policies and procedures. A softcopy and hardcopy of the policies and procedures ready for the auditors to review. This will save you time and trouble that would otherwise be spent scrambling through the policies and procedures looking for something specific.

On the other hand,  the auditors will save time otherwise spent asking for various documents at various stages.

Step 5: Ensure a Written Information Security Plan

Next to the IT policies and procedures, you should also have a written information security plan in place.

All firms that are registered with the Security Exchange Commission (SEC)  are required to have a written information security plan. A written ISP (Information Security Plan) can help prepare the organization for IT-related risks and measures to handle it.

Regarding an information security plan,  a lot of organizations have no idea where to start.  this leads to unnecessary and time-consuming work. Automated tools and processes should be used to make the process effortless. You can also hire an expert auditor to help you through the
process.

Step 6: Create a List of Controls and Safeguards

Whether big or small, in an IT infrastructure, controls and safeguards are one of the most important aspects. You must have proper controls at strategic points to keep the applications and software secure. And create a list of all controls and save that you have in place for the IT system

Step 7: Conduct a Gap Assessment

Being aware of the gaps in your IT infrastructure can make the IT audit go more smoothly. You should also have a grasp on apps and services to better understand and secure them.

No system is entirely fool-proof, and as a user,  you’re best-equipped to find vulnerabilities in your system.

Step 8: Perform a Self-assessment

Auditors are definitely the best for an audit but no one knows the system better than you. A self-assessment of your system will help you get a better understanding of your organization.

A self-assessment will also give you confidence about your system’s performance and help you understand the audit results better

Step 9: Findings from Previous Audits

If this is your first IT audit, then you can skip this step. However,  if it's not,
then make sure to present the auditors with the findings from the previous
audit.

Any issues found in the previous audits that were not addressed before should also be mentioned.

Step 10: Schedule Tests or Deliverables

Starting an IT audit with all your test and deliverables scheduled for after the audit can show in a negative light. Perform some basic tests and have deliverables beforehand

Step 11: Be Prepared for Anything

After the audit may not like the findings. Be prepared for anything. Going into the audit with the proper mindset can help prepare you for any kind of results

Step 12: Get A Second Opinion

Getting a second opinion about the findings of the auditor is not a bad thing. It gives you a head start when you get the results. It also helps you prioritize the results and begin the remediation process.

IT Audit Process

An IT audit guide is not complete without the audit process, which includes five steps.

  1. Planning the IT audit
  2. Studying and evaluating controls
  3. Testing and assessing controls
  4. Reporting and documenting the results
  5. Follow-up

What is the Outcome of an IT Audit?

Now that we understand the importance, purpose, and process of the IT audits. You might be wondering,

What will be the outcome of the IT audit?

What will be the IT audit deliverables?

An IT audit deliverable includes the following documentations:

  • Planning of the audit scope and objectives
  • Descriptions of the criteria
  • Audit program
  • Audit steps and evidence
  • Contributions of other auditors and experts
  • The final audit findings, conclusions, and recommendations
  • Audit documentation
  • Audit work to put
  • Evidence of the audit supervisory review

The audit report shall include the following:

  • Introduction (executive summary)
  • Finding and results
  • Conclusion
  • Any reservation (with regards to the audit)
  • Recommendations

Don't you have the documentation,  you need to make sure that:

  • The facts presented in the document complete
  • Recommendations are realistic
  • Implementation dates are agreed-upon and flexible

Conclusion

We have discussed the complete process of an IT audit and it’s importance in an organization.  if you're considering an IT audit for your organization or just want to update your IT policies and procedures, make sure to check
out IT procedures template for ready-made IT templates for all your needs.

Previously published at https://www.it-procedure-template.com/importance-of-an-it-audit-for-your-business/

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