Robert L. Mainardi - Beyond Audit

One caveat must be mentioned when it pertains to assigned budgets. A budget is the documented estimate of time to complete a task, and it is based on either historical data or a projection that was formulated from the testing requirements to be completed. Keep in mind that budget estimates are just a best guess. Although they should be regarded as a guide for how long any audit task or testing should take to complete, budgets can and should be challenged when they appear to be unrealistic. Do not ever rush or force the assigned work just to fit into the budget number. That is a huge mistake. The moment you identify that there is no possible chance that you or any auditor could complete an assigned task under that corresponding budget, say something. Do not try to go faster to make the deadline just for the sake of the deadline. When that happens, whatever work or testing was supposed to be completed will get finished within the budget but will ultimately have exclusions and mistakes, along with a false sense of accomplishment.

One additional tip related to budgets: The moment you are certain there is not sufficient time to adequately complete the assigned task within the budget, reach out to your audit project lead and explain the need for additional time. Make sure you detail the initial budget, data and work required, and the time needed to review and conclude on the data. This will ensure you have considered all aspects of the task and sufficiently supported the need for additional time to complete the work adequately and accurately. In the remote audit environment, the budgets tend to be more aggressive because audit teams believe execution of the planning and fieldwork phase do not need any buffer time built into the assignments because there is no time for chatting about the work or relationship building. It is all about just getting the information and data and doing the work. In actuality, the inverse is true. In a remote audit, it takes more time for auditors to understand the process requirements and data being provided, so more time needs to be allowed for the audit team to ask qualifying questions to ensure the auditors fully understand the process before attempting to evaluate for the planning phase or reperform the process during fieldwork. So, before you begin a task or audit testing, make sure you review the work being assigned, along with the corresponding budget, and determine if the initial budget number matches the work assigned. Auditors should always closely monitor their own work and ensure they are delivering a complete quality product while communicating with the audit project lead on any work challenges and potential deadline extensions. This will assist the project lead in ensuring the business client during this remote audit is up to date on the status of the audit work being completed in their business area.

In an effort to keep your business partner “in the know” during this remote audit, it is paramount to establish regular, formal status meetings throughout the audit. The frequency of these status meetings is usually established in the introduction or kickoff meeting. When I am leading an audit (especially a remote one), I will suggest to my business partner that we should have a weekly status meeting to ensure communication channels between the two teams remain open, clear, and strong. Along with my weekly status meeting request, I provide the need and benefits of the timing. When it comes to the need, auditors have to realize that in any audit, getting the information to do the job requires many requests (usually more than one per need) for information, data, and explanation. To fulfill that need, we can establish a weekly meeting to discuss the status of the audit as well as outstanding requests to date. This meeting provides a perfect forum to facilitate active follow-up and communication of the work in progress, completed, and still to be done. Additionally, auditors benefit by being well informed on any of their work in progress and can communicate it back to their management team, keeping them informed of the audit in progress. When you look at the weekly update meeting from the business team side, tell them this meeting is to provide an up-to-the-moment status on the audit, documentation and data requests, as well as any issues noted to date. Business team management wants to be made aware of the issues because it will provide an arena to clarify and potentially quantify the issues identified in the status memo. Keep in mind that auditors never, ever put an issue in the status memo until and unless it has been validated by the audit team as authentic (poses a risk to the business unit achieving its objective(s)) with someone in the business unit. Auditors do not want to go into a status meeting with an issue that has not been validated because if they are wrong, it will impact their credibility not only in this meeting, but also for the rest of the audit. Each time an auditor brings up any issues from that meeting forward, it will be called into doubt because of a single mistake made in a status update meeting. Ultimately, though, I will leave the status meeting frequency up to my customer. If my clients prefer to have a meeting every two weeks, that is their choice, but I let them know the associated risks. Having a longer time between status meetings does not impact the business partner as much as it does the auditor because they could possibly have to wait 10 days to get an answer or a delivery status on a requested item, which could impact their ability to complete the task and meet the budget.

As referenced in the previous paragraph, to effectively facilitate this audit status meeting, a formal status memo is created by the audit team and provided in advance to their business partner. This allows the business personnel to review the document and prepare any questions regarding its contents and obtain an update on any and all outstanding audit requests. As you complete the audit status template, keep in mind there are a few specific objectives of the template. First and foremost, the status memo provides a percentage completion status of each phase of the audit. It details the planning, fieldwork, and reporting phase completion percentages. This provides your business partner with a snapshot of the audit at any time and helps guide them on the time remaining in an audit (which always seems like it is not soon enough for them). Second, the status memo details any identified and validated issues that have been noted to date. Remember that these items, to appear on the formal status memo, must have been validated with someone in the business processing unit to ensure the audit is interpreting the testing data accurately and fairly. Also, there is a section below each issue requesting a proposed management action. It is proven that the sooner you start discussing the issues and requesting a management response, the more effective the audit report phase. This additional section assists in facilitating a root cause ( Chapter 7) discussion and proposed management action to properly address that cause and ultimately the identified issue. Third and just as valuable, the status memo details any outstanding audit requests for documentation, data, or samples. Again, in an effort to facilitate what could be a challenging client discussion, the status memo indicates when the request was made and that it still remains unfulfilled. From the date requested, it is simple to see how long this item has been outstanding and allows the auditor to explain that the work cannot be completed until that information is received. This results in a longer audit, which neither the audit team nor the business client wants. And finally, the status memo outlines the remaining steps in the audit, including, where applicable, the projected target date (i.e., the draft report, final report, survey). Overall, the status memo provides a quick snapshot of the audit status and gives the auditor an effective tool to facilitate the meeting with confidence.