In recognition of Internal Audit Month, we invited Stinnett Dallas Manager Stephanie Byrd to share with us what she considers when she conducts internal audits of facilities in the energy sector. Stephanie has 10 years of experience providing internal audit, Sarbanes-Oxley compliance and process improvement services to oil and gas companies.
Stinnett: Stephanie, give us a high-level overview of Internal Audit.
Stephanie: Internal Audit can give management insight into specific areas of their business and the related processes and controls. Areas of focus might include a joint venture partner or vendor, critical operational processes or even a procedure. For example, in the energy sector, many clients like to include site-specific operational reviews. The purpose of these reviews is to develop an understanding of the design and effectiveness of current procedures and standards for ensuring the safe and reliable operation of facilities—which typically include existing operating policies and procedures for the specific facilities.
Stinnett: Tell us about facility reviews and what risks you consider when you perform those reviews.
Stephanie: As part of the risk assessment associated with the facility, internal audit works with the operations management team to consider the following areas: regulatory compliance (federal and state), safety, reliability and quality of service. Based on the site selection, the engagement team works with local operations to schedule a review. The review of the facility encompasses preparation to ensure the internal audit team understands the relative risks and the areas of focus.
For example, depending on the type of facility—for instance processing plants and storage terminal—the following scope areas may apply:
- Policies and Procedures Related to Plant Management
- Quality Control
- Safety Training and Reporting
- Physical Security Practices and Procedures
- Measurement Procedures
- Condensate Management
- Preventive Maintenance Program
- Critical Spare Management Program
- PSM Plan Management
- RCM Plan Management
- SPCC Plan Management
While focusing on the applicable areas of scope, we work with executive management and operations to determine if there are any additional areas of concern for us to review. We interact with all levels of facility personnel, identify any process strengths to highlight in our report, and discuss observations and recommendations with operations while in the field to ensure everyone is in agreement prior to leaving the field. There may be additional follow up or further research for open items. Additionally, operations provides responses on remediation of any issues and the timing of remediation efforts which are then consolidated into a report. Items in the report might include background on the specific facility, details of the review, strengths, observations, recommendations and management responses. It’s a collaborative effort with management to ensure everyone is in agreement on the final report/deliverable.