GRC Auditing: A Practical Guide

What Is a GRC Audit?

Governance, risk management, and compliance (GRC) is the internal approach of an organization to security and compliance. A GRC audit is an internal audit, as opposed to an official audit overseen by a government authority or the PCI Council (for PCI DSS). Each organization determines its own GRC requirements. Typically, a chief compliance officer (CCO) or CFO determines GRC procedures and reports.

Organizations use GRC audits to assess the implementation of their GRC frameworks, which are different for each company. Every organization has a unique set of GRC audit deliverables and processes.

Here are a few examples of reports generated by a GRC audit process:

• Segregation of duties (SoD) within an organization
• Password management for enterprise resource planning (ERP) systems
• User account and role change monitoring

The Role of Internal Audit in Corporate Governance

Internal audits help organizations review their governance processes, risk management strategy, and security controls accurately. They provide an additional line of defense, providing the board with a comprehensive view of the organization’s governance structures and their level of success.

Audits can serve as a catalyst that prompts managers to implement changes and improvements to an organization’s security procedures. They highlight risks and weaknesses in the overall security and compliance structure, allowing companies to identify and predict challenges. This insight allows management to stay ahead of the risks.

Audits can focus on the needs or challenges of an organization, assuring that procedures used to manage governance are appropriate. The scope of an audit may vary, but it often includes:

• The composition of the board, including training, skills, and support.
• Reports on meetings, including attendance, discussion content, and duration.
• The effectiveness of communication throughout the organization
• Risk monitoring
• Performance of controls
• Stakeholder inputs and feedback
• Conflicts of interests

Organizations face a growing number of risks, including innovation disruption, geopolitical threats, and new cybersecurity technologies and trends. Companies must ensure adherence to best practices and implement a risk-based auditing approach to strengthen their governance structure, provide insights and assurance on their processes, and maintain successful operations.

What Is the Audit Process?

Here are four fundamental steps of the internal audit process:

1. Planning

The initial step is to plan the audit. Management should outline the extent and scope of the audit. The audit committee then decides which departments and which employees should participate in the audit involving as many people as possible to promote better insights, feedback, and results. Organizations also decide on the duration of the audit, providing the auditor with a deadline by which to complete the audit and the report.

2. Fieldwork

The auditor goes into the field, explores, observes, and questions. Auditors also talk to the main stakeholders and front-end employees to determine the success of the business process. They then identify any non-compliance or vulnerabilities that could result in a compliance issue in the future. An organization must discover and manage all risks identified by the auditor.

3. Audit Report

After the auditor gathers the information needed to achieve meaningful insights and identifies corrective actions, they move on to the next internal audit process involving audit reports.

This audit report outlines every significant finding the auditor discovers during their fieldwork. The findings, such as vulnerabilities or errors, are examined in-depth. The report ends with corrective actions—the auditors offer solutions to address the weaknesses in the current security processes.

4. Follow Up

At the last stage of the audit process, two kinds of results emerge:

• Non-conformity results—the gaps the auditor identifies. These gaps are the areas of discrepancy between what the organization outlines in the procedures and what occurs. The gap also points to regulatory failures.
• Observation results—indications for the use of processes aimed at obtaining improvements. The observations propose achievable objectives by suggesting alternative security measures.

The auditor then goes back to the significant findings to see whether the organization has fixed the issues. If the organization has dealt with all the vulnerabilities and resolved the non-compliance issues, the audit process ends.

If the auditor identifies additional problems during the follow-up, management takes additional corrective actions and schedules another audit and follow-up.

How to Prepare for a GRC Audit

Here are the key steps you should follow to prepare for an IT compliance audit:

• Determine relevant compliance standards – different parts of an organization, different computing systems, or even specific data within a system can be subject to different regulations and industry standards.
• Perform a risk assessment and gap analysis – identify the major risks affecting the organization and the current gaps in terms of governance, risks, and compliance. This typically requires a comprehensive inventory of all data assets.
• Create a project plan – define a timeline with clear milestones, roles and responsibilities, and a budget required to achieve the milestones.
• Design and implement controls – most of the work in preparation for a GRC audit is in building controls that can compensate for current risk and compliance gaps.
• Document everything – it is not enough to implement a control, you need to have documentation and monitoring in place to prove that the control is in place, is effective, and has not been compromised.
• Conduct a readiness assessment – before the audit, it is a good idea to perform a “drill” that checks the effectiveness of your controls in real-time. As part of the drill, conduct interviews with IT or security personnel, preparing them for the real interviews that will take place during the security audit.

GRC Audit Automation with PathLock

GRC is a hassle, with seemingly endless amounts of manual work piling up by the day. Organizations typically have 200+ key internal controls to prove each type of compliance, and each control takes 40 or more hours to test. Furthermore, testing on these controls may only be done once a year. This is an error-prone process that only looks at 3-5% of the activity in a given enterprise.

Pathlock shifts organizations towards a continuous compliance approach, which proactively monitors controls and reports on violations of those controls in real-time. Organizations can have complete visibility of their risk and compliance status at all times, so they are always prepared for the next audit.

Complete Visibility

Pathlock radiates GRC and IRM information to the most critical tools in your landscape for real-time status on your key controls. Pathlock integrates with ServiceNow, MetricStream, Archer, SailPoint, Okta, SAP GRC, and more.

Comprehensive Rulebook

Pathlock’s catalog of over 500+ rules can provide out-of-the-box coverage for controls related to SOX, GDPR, CCPA, HIPAA, NIST, and other leading compliance frameworks.

Real-time Risk Mitigation

Pathlock allows users to quickly investigate and respond to potential risky transactions by reviewing access, de-provisioning users, forcing 2FA, or even allowing Pathlock to respond intelligently in real-time, terminating suspicious sessions and blocking transactions in real time

Out-of-the-Box Integrations

Pathlock’s out-of-the-box integrations have your key business applications covered. Monitor and enforce controls across SAP, Oracle, Salesforce, Workday, NetSuite, Dynamics365, and more.

Lateral SOD Correlation

All entitlements and roles are correlated with a user’s transactional behavior, consolidating activities and showing cross-application SODs between financially relevant applications.

Continuous Control Monitoring

Pathlock identifies the largest risks by monitoring 100% of financial transactions from applications like SAP in real-time, surfacing violations for remediation and investigation.

Interested to find out more about how Pathlock is changing the future of GRC? Request a demo to explore the leading solution for enforcing compliance and reducing risk.