Zac Explains Audits: Volume 022

How Others Are Structuring the Audit Universe

Real-World Metadata Fields, Tiering Models, and Prioritization Approaches That Actually Work

If you’re a Chief Audit Executive (CAE) or Internal Audit leader, chances are you’ve been asked: "How should we structure our audit universe to stay agile, risk-aligned, and future-ready?"

It’s a good question because the way you structure your audit universe today defines how effectively you can identify risk tomorrow. But while many audit teams have an audit universe, far fewer are confident in how it’s structured.

In this issue, we’re breaking down how leading organizations are designing and evolving their audit universes, what metadata fields they’re using, how they’re organizing or tiering entities, and the frameworks behind how they score, prioritize, and revisit risk.

First, What Even Is the Audit Universe in 2025?

Let’s define it simply: Your audit universe is a comprehensive inventory of auditable entities- things you could audit. It’s the foundation of your risk assessment, annual plan, and resource allocation.

But modern audit teams aren’t just listing business units anymore. Today’s audit universe often includes:

• Processes (e.g. AP, Procurement, Onboarding)

• Systems (e.g. ERP platforms, cloud apps, access layers)

• Legal Entities or Locations

• Projects and Strategic Initiatives

• Emerging risks and regulatory areas (e.g. ESG, AI governance)

• Third-party relationships or vendors

Your audit universe should reflect the way your organization operates and risks manifest, not just how your org chart is drawn.

Real-World Metadata Fields Being Tracked

At its core, your audit universe is only as valuable as the information you track about each entity. Here are some common and powerful metadata fields I've seen used by audit leaders across industries:

Common Fields (Table Stakes)

These fields are foundational and nearly universal:

• Auditable Entity Name

• Owner / Point of Contact

• Process or Business Unit

• Last Audited Date

• Frequency (e.g. annual, biennial)

• Risk Score or Risk Tier

• Planned / Proposed Next Audit Year

Emerging Fields (Added Value)

These fields help enhance risk insight, alignment, and audit readiness:

• Strategic Importance (Is this tied to strategic objectives or transformation?)

• Materiality (Impact of failure from a dollar, reputation, or compliance lens)

• Control Environment Maturity (e.g. Ad hoc → Repeatable → Optimized)

• Known Issues / Past Findings

• Business Change Velocity (Is this a stable or high-change area?)

• Data Availability / Automation Readiness (Can this audit be analytics-driven?)

• Key Technology (Critical systems in scope, ERP dependencies, etc.)

Bonus Fields

Some orgs are going further with:

• Third-Party Dependencies (If a vendor supports this process)

• Regulatory Exposure (Does this process fall under SOX, HIPAA, NIST, etc.)

• Fraud Susceptibility Rating

• Customer Touchpoints (Does this impact external customer experience?)

👉 Pro Tip: Start simple. Use a tiered approach to metadata maturity, track basics for all entities, and deeper fields only for high-risk or strategic areas.

Tiering Structures: How Are Others Organizing the Audit Universe?

While metadata gives you detail, structure helps you scale. Here are common tiering or segmentation models others are using:

1. Process-Based Segmentation

This is still the most popular.

• Example Tiers: Finance, HR, Operations, Sales, IT, Compliance

• Pros: Easy to align with functional owners.

• Cons: May hide interdependencies (e.g. IT risks buried in Ops).

2. Risk Tiering

Some orgs are adding a layer of “importance” or criticality on top of function.

• Tier 1 = High-risk, highly regulated, high-dollar

• Tier 2 = Moderate risk, stable, or repeatable areas

• Tier 3 = Low-risk or low-impact

Use this to drive planning frequency (e.g. Tier 1 reviewed annually, Tier 3 every 3–5 years).

3. Audit Type Classification

Segmenting by type of audit that would be performed:

• Operational

• Compliance

• IT / Cybersecurity

• Financial

• Strategic / Advisory

This helps resource planning and SME alignment.

4. Organizational Hierarchy Tie-In

Some orgs use business hierarchy to segment:

• Corporate

• Business Unit

• Subsidiary / Region

This can be helpful when aligning risk oversight with regional or functional leaders.

Prioritization Strategies That Go Beyond “Gut Feeling”

Risk-based planning should be just that: risk-based. But the scoring methodology varies widely. Here’s how others are making it work:

1. Weighted Risk Scoring

Most teams use a scoring model based on multiple criteria. Example fields:

2. Qualitative Risk Input

Some orgs balance numeric scoring with SME interviews, surveys, or workshops. This captures:

• Leadership concern

• Audit Committee insights

• Informal “red flag” areas

• External trends (e.g. AI, ESG, geopolitical disruptions)

Hybrid models work best, combine quantitative scoring with qualitative overlays.

3. Continuous Risk Monitoring

More advanced audit shops are leveraging continuous data inputs:

• Control failures

• Incident reports

• Hotline tips

• Real-time KPIs (e.g. customer complaints, system downtime)

This allows dynamic reprioritization of audit plans when risks shift.

Lessons Learned from the Field

Keep It Modular

Break your audit universe into logical groups that make future expansion easy. Example: Instead of lumping “Operations” into one entity, break it into Procurement, Manufacturing, Logistics, and so on. This gives you more flexibility and visibility.

Define a Governance Rhythm

Don’t treat the audit universe as a “set and forget” exercise. Update metadata regularly, quarterly if possible, and align with risk assessment refreshes.

Bake in Strategy, Not Just Risk

Some orgs only audit where the risk is high. Others also audit where the stakes are high- like strategic initiatives, transformations, or cultural shifts. This is where Internal Audit earns a seat at the table.

Final Thoughts: Structure Enables Strategy

If your audit universe feels more like a static spreadsheet than a living framework, it’s time to revisit it.

Because the real power of a well-structured audit universe isn’t just checking boxes. It’s enabling Internal Audit to:

• Prioritize what matters most

• Adapt to a shifting risk landscape

• Communicate clearly with stakeholders

• Proactively serve the business, not just react to it

Structure isn’t about rigidity. It’s about clarity.

So whether you're revamping an old audit universe or building one from the ground up- use these ideas as a starting point, not a final destination. The best structures evolve alongside your business, your team, and your risk profile.