Preparing for DORA Audits: A Practical Guide for Financial Institutions

With DORA in full effect, financial institutions must prepare for supervisory audits and examinations. This comprehensive guide helps you understand what to expect and how to prepare effectively.

Understanding DORA Audit Authority

Who Conducts Audits?

Multiple authorities may examine DORA compliance:

• National Competent Authorities: Primary supervisors for most entities
• European Supervisory Authorities (ESAs): Direct oversight of critical ICT providers
• Internal Audit: Ongoing compliance verification
• External Auditors: Independent assurance

Audit Triggers

Examinations may be:

• Scheduled routine inspections
• Risk-based targeted reviews
• Incident-driven investigations
• Thematic reviews across sector
• Follow-up on previous findings

Audit Scope and Focus Areas

Pillar 1: ICT Risk Management

Auditors will examine:

• Governance: Board oversight, roles, and responsibilities
• Documentation: Policies, procedures, and standards
• Risk Assessment: Methodology, frequency, and results
• Asset Inventory: Completeness and accuracy
• Controls: Implementation and effectiveness
• Business Continuity: Plans, testing, and validation

Pillar 2: Incident Reporting

Key audit points:

• Incident detection capabilities
• Classification procedures
• Reporting timelines compliance
• Incident documentation and records
• Root cause analysis processes
• Lessons learned implementation

Pillar 3: Digital Operational Resilience Testing

Auditors will verify:

• Testing program coverage and frequency
• Test results and findings
• Remediation of identified issues
• TLPT execution (for applicable entities)
• Business continuity testing
• Documentation of all testing activities

Pillar 4: Third-Party Risk Management

Focus areas include:

• ICT service provider register
• Contractual compliance
• Due diligence documentation
• Ongoing monitoring evidence
• Concentration risk assessment
• Exit strategy documentation and testing

Pillar 5: Information Sharing

Examination of:

• Participation in threat intelligence sharing
• Confidentiality arrangements
• Use of shared information
• Contribution to cyber threat understanding

Document Preparation

Essential Documentation Library

Maintain organized records of:

Documentation Best Practices

• Version Control: Track document changes and approvals
• Date Stamps: Clear evidence of when activities occurred
• Evidence Trail: Link decisions to supporting analysis
• Accessibility: Organized repository for quick retrieval
• Retention: Maintain records for required periods

Pre-Audit Preparation

Conduct Internal Assessment

Before external audit:

1. Gap Analysis: Review compliance against all DORA requirements
2. Documentation Review: Ensure all evidence is complete and current
3. Process Validation: Verify procedures work as documented
4. Staff Interviews: Test knowledge and understanding
5. Control Testing: Validate effectiveness of key controls

Common Gaps to Address

• Incomplete asset inventories
• Outdated risk assessments
• Missing third-party contracts or assessments
• Inadequate incident documentation
• Insufficient testing evidence
• Training gaps or missing records
• Unclear governance structures

Remediation Planning

For identified gaps:

• Prioritize based on severity and audit likelihood
• Develop remediation plans with timelines
• Track progress with clear milestones
• Document compensating controls if immediate fix not possible
• Prepare explanations for work in progress

During the Audit

Audit Process Typically Includes

1. Opening Meeting: Scope, timeline, logistics
2. Document Review: Examination of policies and records
3. Interviews: Discussions with management and staff
4. Walkthroughs: Demonstration of processes and controls
5. Testing: Sampling of transactions and activities
6. Preliminary Findings: Initial observations
7. Closing Meeting: Summary of findings and next steps

Best Practices for Responses

• Be Honest: Don't hide issues or provide misleading information
• Be Prepared: Have documents and evidence ready
• Be Concise: Answer questions directly without unnecessary detail
• Be Consistent: Ensure all staff provide aligned responses
• Take Notes: Document all requests and discussions
• Clarify Questions: If unsure, ask for clarification before answering

Common Auditor Questions

Prepare for questions like:

• "How does the board oversee ICT risk?"
• "Walk me through your incident reporting process"
• "Show me evidence of your latest risk assessment"
• "How do you assess concentration risk in cloud services?"
• "What testing did you perform this year?"
• "How do you monitor third-party service providers?"
• "Describe your most significant ICT incident and response"

Red Flags Auditors Look For

• Lack of board involvement
• Incomplete or outdated documentation
• Gaps between policy and practice
• Insufficient resources for ICT risk management
• Repeated incidents without corrective action
• Missing or inadequate third-party contracts
• Untested business continuity plans

After the Audit

Responding to Findings

For each finding:

1. Understand: Ensure you fully grasp the concern
2. Assess: Evaluate validity and significance
3. Plan: Develop remediation approach
4. Timeline: Commit to realistic completion dates
5. Implement: Execute remediation activities
6. Validate: Confirm effectiveness of fixes
7. Document: Maintain evidence of remediation

Management Response

Prepare formal response addressing:

• Agreement or disagreement with findings
• Root cause analysis
• Remediation actions planned
• Responsible parties
• Target completion dates
• Measures to prevent recurrence

Follow-Up Audits

Expect supervisors to:

• Verify completion of remediation
• Assess effectiveness of corrective actions
• Review documentation of fixes
• Conduct additional testing if needed

Continuous Audit Readiness

Year-Round Practices

• Regular Self-Assessments: Quarterly compliance reviews
• Documentation Hygiene: Maintain current, organized records
• Control Monitoring: Ongoing validation of control effectiveness
• Staff Training: Ensure team understands DORA requirements
• Issue Tracking: Log and remediate deficiencies promptly

Internal Audit Program

Leverage internal audit to:

• Conduct periodic DORA compliance reviews
• Identify gaps before external audits
• Validate control design and effectiveness
• Provide independent assurance to board
• Recommend improvements

Working with External Auditors

Benefits of External Assurance

• Independent validation of compliance
• Credibility with supervisors
• Identification of improvement opportunities
• Reduced regulatory examination frequency

Selecting External Auditors

Choose auditors with:

• DORA and financial services expertise
• Relevant certifications and qualifications
• Understanding of your specific entity type
• Independence and objectivity

Special Considerations

Group-Level Audits

For financial groups:

• Coordinate across subsidiaries
• Ensure consistent documentation
• Clarify group vs. entity responsibilities
• Demonstrate consolidated oversight

Cross-Border Entities

For entities in multiple jurisdictions:

• Understand each regulator's approach
• Coordinate audit schedules where possible
• Maintain documentation accessible to all authorities
• Address jurisdiction-specific requirements

Key Success Factors

• Proactive Compliance: Don't wait for audit to address gaps
• Comprehensive Documentation: Maintain evidence for all requirements
• Staff Engagement: Ensure team understands and supports compliance
• Honest Communication: Be transparent with auditors
• Continuous Improvement: Treat audits as learning opportunities
• Executive Support: Secure leadership commitment and resources