Internal audit is a profession that struggles against the stereotypes of our past. When we explore our current processes and methodologies, one area that needs attention is executing the audit plan. If our focus is setting a plan in motion and tracking to completion each year, then we are not able to react to changes in our organizations. Financial services organizations face additional challenges in trying to balance emerging risks with the requirements of the regulatory authorities. By embracing the concept of agile auditing, we will be able to adjust more quickly and act as a more relevant partner to our organizations.
Learning Objectives
• Understand the concept of agile auditing
• Identify areas for applying agile techniques
• Discuss a strategy for successfully implementing agile audit
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Rethinking the Audit Plan for Financial Services
1. 9-7-2019
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Agile Auditing
Rethinking the Audit Plan for
Financial Services Organizations
Steven Zapolski MAcc, CIA
Senior Market Development Consultant
About Jim Kaplan, CIA, CFE
President and Founder of AuditNet®,
the global resource for auditors
(available on iOS, Android and
Windows devices)
Auditor, Web Site Guru,
Internet for Auditors Pioneer
IIA Bradford Cadmus Memorial Award
Recipient
Local Government Auditor’s Lifetime
Award
Author of “The Auditor’s Guide to
Internet Resources” 2nd Edition
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ABOUT AUDITNET® LLC
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Overview
Internal audit is a profession that struggles against the stereotypes of our
past. When we explore our current processes and methodologies, one area
that needs attention is executing the audit plan. If our focus is setting a plan
in motion and tracking to completion each year, then we are not able to react
to changes in our organizations. Financial services organizations face
additional challenges in trying to balance emerging risks with the
requirements of the regulatory authorities. By embracing the concept of agile
auditing, we will be able to adjust more quickly and act as a more relevant
partner to our organizations.
Agile Auditing
Learning Objectives
Understand the concept of agile auditing
Identify areas for applying agile techniques
Discuss a strategy for successfully implementing agile audit
Learn how TeamMate supports agile auditing
Agile Auditing
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Process Review
Pick
applications
to review
Submit list
for approval
Review
application
every third
year
Cut scope
due to
timing
Report
results
Annual risk
assessment
Develop 1-
3 year audit
plan
Present for
approval
Cut scope
due to
timing
Report
results
Agile Auditing
Application Audit Audit Planning
Understanding Agile Processes
Originated from a software
development technique
Alternative to traditional
project management
Agile approaches help teams
respond to unpredictability
Agile Auditing
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Audit Planning
Our audit planning process is antiquated
and is in desperate need of updating
Audit planning should be nimble
We should tackle emerging risk areas
Audit departments should add value!
Agile Auditing
POLLING QUESTION 2
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Audit Planning
57% conduct an annual audit plan
with some periodic updates
40% are updating their audit
plans either monthly or as audit
work is completed
28% anticipate moving to a rolling
audit plan over the next two years
5% are already conducting totally
rolling audits
Agile Auditing
Applying Agile Techniques
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Agile Audit Process Diagram
Risk
Assessment
Plan
Development
Plan
Execution
Reporting
Agile Auditing
Audit
Planning
Audit
Execution
Review
Reporting
Milestone
Planning
Milestone
Execution
Milestone
Review
Milestone
Reporting
Quarterly QuarterlyQuarterlyQuarterly
Defining an Agile Audit Planning Process
Opt for a shorter plan, no more
than the next quarter
Quarterly plan should go through
testing, review, and presentation
within the allotted time
By the quarter end, start planning
the next quarter, considering the
outcome of prior testing and
emerging risks
Assessment
• Perform risk assessment
PlanPlan
Development
• Develop the risk based plan
• Communicate the plan to the audit committee
Execution
• Execute the audit plan
Reporting
• Report results
Agile Auditing
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Defining an Agile Audit Execution Process
Overall audit process is the same
Fieldwork is segmented into
smaller milestones
Fieldwork milestones contain:
Milestone planning
Milestone execution
Milestone review
Milestone reporting
Planning
• Overall audit planning
Fieldwork
• Milestone planning, execution,
review and reporting
Review
• Overall quality review
Reporting
• Overall audit reporting
Agile Auditing
Successful Implementation of Agile Audit
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Applying Agile Techniques
More frequent risk assessment
Shorter audit plan
Structure fieldwork into shorter activities
Audit results feed back into the next quarterly assessment
Audit software provides real time review and automated reporting
Audit Software
Software should support continuous risk assessment with shorter audit
plan periods
Score risk in the assessment to build plan (can be quarterly or real time)
Risks carry to the audit and updated scores feed back into the assessment in
real time
Software should include real time test review
Software should provide historical insights, like showing past audit issues
in the risk assessment
Reporting should be automated or produced quickly for frequent
management updates
Agile Auditing
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POLLING QUESTION 3
Traits of Successful Agile Departments
Maintain an Internal Audit Strategic Plan
Clearly link risk to business objectives
Assess risk more frequently
Leverage consistent risk terms and definitions as other risk functions
Meet regularly with other risk and compliance functions
Promote unified messaging, understanding of risk drivers
Leverage industry and professional thought leadership sources
Perform formal skills assessments with a longer-term view of needs and
actionable development plans
Define and track learning roadmaps and continuing education requirements
Agile Auditing
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Practical Application
More frequent risk assessment
Create audit from the assessment and include the risks from the
assessment
The risks are now in the audit and can be modified wih results flowing back
to the assessment
Agile Auditing
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Shorter audit plan
Create quarterly audit plans
Set Capacity Planning to a
quarterly frequency
Only build out one quarter at a
time, or build out the next quarter
as a tentative plan
Agile Auditing
Structure fieldwork into shorter activities
Break fieldwork into smaller sections to allow for more frequent review
Agile Auditing
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Audit results feed back to the next assessment
Roll quarterly assessments forward
and include Scores in the settings
Updated scores and Historical
Insights feed back into your
assessment
Agile Auditing
Real time review and automated reporting
Don’t wait until the end of the audit to start reviewing
Set your dashboard and notifications to alert you when individual tests are
ready for review
Reports can be configured to pull specific data and to automatically run
Agile Auditing
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POLLING QUESTION 4
Agile Auditing
Rethinking the Audit Plan for
Financial Services Organizations
Steven Zapolski Macc, CIA
Senior Market Development Consultant
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