2019 10 01 Audit Proj MGT

Eight Ways to Improve Audit with Project Management
Project Management
8 Ways to Improve Audit
with Project Management
Mr. Kobel is Managing Partner for Verracy and has more than
25 years of experience in finance, accounting, audit, risk and
compliance.
Mr. Kobel brings a diverse background working with

organizations from venture-backed startups to global Fortune
500 companies. Prior to joining Verracy, Mr. Kobel was the
Asia-Pacific CFO for Ryder Logistics while living in Singapore.
Bret Kobel
Managing Partner Mr. Kobel received his BS degree from Indiana University and
bkobel@verracy.com his MBA from The University of Texas at Austin. He is a
+1 (512) 658-2228
member of the Institute of Internal Auditors (IIA) and the
Verracy Association of Certified Fraud Examiners (ACFE). Mr. Kobel is
111 Congress Ave., Ste. 400 currently an instructor and conference speaker for the IIA,
Austin Texas USA 78701
Verracy.com ACFE and ISACA.
1
What is Project Management?

The Project Management Institute defines “project
management” as:
Project management is the application of

knowledge, skills, tools, and techniques to project
activities to meet the project requirements.
What does that mean?

Using an established framework or methodology to:
 Increased quality
 Meet budget requirements
 Maintain the established timelines
 Meet / exceed customer expectations
 Enhanced effectiveness and efficiency of
activities
 Better risk assessment
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Why do projects fail?
What is failure?
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Budget vs. Actual
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Meeting Expectations
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Project Delivery
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Egyptian Project Management
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What are the most common problems in Audit?
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Management of Audits
 Late
 Resource overrun
 Lack of focus
 Audit client pushback
 Scope change…creep…
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Reasons Projects Fail

 Lack of Senior Management Involvement
 Poor Requirements
 Unrealistic Expectations
AUDIT
 Scope Creep
 Lack of User Involvement
 Inexperienced Project Managers
 Lack of Resources
 Resource Conflict
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Five Phases of a Project
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Project Characteristics
Characteristics Project Audit
Defined start and finish Yes! Yes!
Defined scope and objectives Yes! Yes!
Defined phases Yes! Yes!
Phases include well defined tasks and activities Yes! Yes!
Budgets that include timeline, resources and costs Yes! Yes!
Review and approval points for deliverables Yes! Yes!
Formal recordkeeping and documentation Yes! Yes!
Measurable final result(s) Yes! Yes!
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7
Four Cornerstones of
Project Management
Cost Schedule
Scope Quality
One cannot change one without impacting the others.
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8 Ways to Improve
Audit with Project
Management
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PLANNING
Devote enough time to planning.
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Planning
It all starts with planning. Planning is the
most critical phase of a project. In project
management the planning phase is focused
on gathering business requirements.
In audit planning is focused on

understanding the business to identify,
evaluate and prioritize risks.
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Planning
What % of time for the audit should be

devoted to planning?
Why?
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In order to plan properly, what do we need to do?
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Understanding the business…
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Planning
In projects business requirements are
gathered through:
• Research
• Interviewing
In auditing we do the same:

• Research (document review)
• Interviewing
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Planning
Reading and Talking.
Then documenting our understanding.
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If you don’t know where you are going,

any road will get you there.
~Cheshire Cat (Alice in Wonderland)
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Planning
• Most audits run into problems due to lack
of appropriate planning.
• Many things that should be a part of
planning are often done during field work.
What kind of issues can that cause?
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Audit Engagement Planning

(Schedule Audit / Notify Client)
1. Understand the Business
2. Preliminary Scope ‐ SIPOC
3. Preliminary Engagement Risk Assessment
4. Prioritization of Risks
5. Identification of Controls
6. Finalization of Scope & Audit Objectives
7. Develop Audit Work (Test) Program
Conduct Fieldwork
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Planning Cycle
Audit Business
Program Objectives
Everything should
always tie back to
the business Audit Risks to
Scope Objectives
objectives and risks
Audit Prioritize
Objectives Risks
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Audit Planning
• Scope • Audit Work Plan
• Resources • Budget
(Schedule & $$$)
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SCOPING
Formally scope the audit.
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Defining Scope
Properly scoping a project / audit is crucial to:
 Managing timeline and budget.
 Minimizing scope change and creep.
 Executing a targeted and focused audit.
 Delivering a targeted, focused and persuasive
audit report.
 Facilitating an action plan that will evoke positive
change.
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Audit Scope
Performance Standard 2220 – “engagement
Scope” – “The established scope must be
sufficient to satisfy the objectives of the
engagement.”
2220.A1 – “…scope must include consideration

of relevant systems, records, personnel and
physical properties…”
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Scope Statement
Should include:
 Locations to be visited.
 For diverse functions, a list of processes and
sub‐processes.
 Relevant systems, records and physical properties including 3rd party
locations.
 Components of process – manual vs. automated.
 Time frame to be covered.
 What else?
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Defining Scope
Scope will generally be focused on the duties
being performed in the area being audited,
however the extent to which interfacing areas
will be reviewed should be defined.
Example – what other areas should be

considered when auditing purchasing?
Accounts Payable, Receiving, any others?
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Defining Scope
 Scope is defined by the established business and
audit objectives.
 Scope establishes the boundaries of the audit.
 States nature and intent of audit as well as
timeframe to be covered.
 Specifies which activities will be reviewed and
which will be excluded.
 Why do we want to define what will be excluded?
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Defining Scope
Scope defines
the boundaries
of the audit
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Scoping – Visual
Representation
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Defining Scope
SIPOC – The best 20 minutes you can spend

to define scope and control scope creep.
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Defining Scope ‐ SIPOC

S I P O C
Suppliers Inputs Process Outputs Clients
Triggers the Feeds the Execution of Product of Recipient of

Process Process Process Process Product
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S Suppliers The “who” or “where” the input comes from.
I Inputs The “what” that starts the process.
P Process The process including sub‐processes.
O Outputs
The “what” that the process produces and “ends”
the process.
C Clients The “who” or “where” the output is delivered to.
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Example ‐ SIPOC
S I P O C
Suppliers Inputs Process Outputs Clients
• Live Check
• ACH
• Other Accounts
• Wire
Department Invoice Payable Vendor
• Credit to
• Vendor Payments
another
invoice
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Exercise
SIPOC
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Exercise
Defining Scope
SIPOC Exercise – Defining Scope

and Setting Expectations
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WORK PROGRAMS
Leverage work programs to schedule
and plan approach.
Work Program = Gannt Chart
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Gantt Chart
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Audit Plan & Schedule

Have you ever mapped out the audit
engagement program and test steps on
a Gantt chart?
A calendar?
What did you discover?
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Gantt Chart
 List of all tasks
 Dependencies
 Duration of each task
 Sequence of tasks
 Critical path
 Resource allocation
 Conflict identification / resolution
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How does that translate to audit?
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Project Management in Audit

Gantt Chart (list of all tasks) = Work (Test) Program
How do we develop the work program?

 Understanding the business
 Document research
 Interviewing
 Identifying, evaluating and prioritizing risks
 Audit Scope
 Identifying controls
 Determining tests of controls to ensure effectiveness
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To incorporate project management techniques we
need to determine:
 Duration
 Dependencies
 Conflicts / Constraints
 Sequence
 Resource allocation
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Sequence = order tasks are performed.
What determines sequence?

 Risk
 Dependencies
 Anticipated issues
 Efficiency
 Conflicts
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Use the Work / Audit Program to plan the approach.
How?
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Plan Your Approach

 Conduct audit in order of risk – high to low
 Plan audit steps in fastest sequence
 Identify areas of possible redundancy and overlap
between team members.
 Plan for areas of down‐time and waiting
 Know what areas can be expedited – need less audit client
input or documentation
 Identify where samples can be used for multiple tests
 Plan for least invasive approach on client
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Conflicts = unrealistic expectations
Constraints = factors that cannot be changed
Common conflicts / constraints caused by:

 Dependencies – expecting to start a task before its predecessor is
completed
 Resources – conflicts? training?
 Redundancy and overlap of tasks – specific to audit
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CRITICAL PATH
Identify the Critical Path
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Critical path
Longest sequence of activities in a project
plan which must be completed on time for the
project to complete on planned due date.
An activity on the critical path cannot be started

until its predecessor activity is complete; if it is
delayed for a day, the entire project will be delayed
for a day unless the activity following the delayed
activity is completed a day earlier.
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Duration + Dependencies = Critical Path
Critical Path = Timeline for Audit
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Determining Critical Path

 A list of all activities required to complete the
project;
 The time (duration) that each activity will take to
complete;
 The dependencies between the activities; and
 Logical end points such as milestones or
deliverable items.
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Critical Path Example
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Critical Path
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Activity ID Activity Description Predecessors Duration (weeks)
1 Gather Business Requirements 4

2 Develop Design / Architecture Plans 1 10
3 Equipment Selection 2 2
4 Building Permits and Zoning 2 4
5 Purchasing and Vendor Selection 3 3
6 Construction 4&5 16
7 Interior Finish 6 4
8 Installation and Set Up 7 1
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ANTICIPATE
Anticipate and plan for problems.
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What are some problems that commonly

occur during an audit?
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Common Challenges
 Waiting….waiting…waiting
 Scope creep
 Changes in risk assessment
 Resource constraints
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Can we anticipate them?
If we can anticipate them, can we plan for them? How?
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LESSONS LEARNED
To anticipate and plan for problems.
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Lessons Learned
 How did we do?
 Unexpected challenges?
 Scope creep?
 Did we adequately address risks?
 Budget?
 On time?
 Within $?
 Evaluate client satisfaction
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Lessons Learned
 Adequacy of the audit planning process
 Established scope and audit objectives
 Comprehensiveness and direction
provided by the audit work program
 Attainment of sufficient, competent
evidence
 Audit effectiveness and efficiency
 Audit team performance and their
satisfaction with all aspects of the audit
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Lessons Learned
 Solicit input from the audit client
regarding:
 The value of the audit
 Competence and professionalism exhibited by
the audit team
 Client feedback?
 Solicit input from other interested parties
on same criteria
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MONITOR &
CONTROL
Know where you are and where you
need to be.
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Project management is about two things:
Planning and Measuring
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Goals for Project Management

in Audit
 On time
 On budget
 Less invasive approach for client
 Audits that are focused and targeted to risks
 Effective communication throughout, including
reporting
 Organized, professional approach that increases
credibility
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How do we stay in budget and on time?
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Controlling and Monitoring

 Plan the work, work the plan!
 Stay in scope
 You performed a risk assessment – rely on it.
 Set realistic expectations, then met them.
 Plan for the “unexpected” – its not really
unexpected.
 Formal change management
 Every “addition” should be a management decision
 If perspective of risk has changed, can something be
removed from audit?
 Consider whether changes warrant a new or additional
audit
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Use “Critical Path” execution
 Conduct audit in order of risk – high to low
 Plan audit steps in fastest sequence
 Identify areas of possible redundancy and overlap between team members.
 Plan for areas of down‐time and waiting
 Know what areas can be expedited – need less audit client input or
documentation
 Identify where samples can be used for multiple tests
 Plan for least invasive approach on client
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 Avoid Scope Creep!
 The better the planning, the better the execution.
 Know when to stop ‐ new audits, follow‐up audits, rabbit holes.
 Think of ways to fast track and crash the path
 Data Analytics
 Using samples for multiple tests
 Request samples in advance
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Controlling the Audit

 Run audit like a business
 Status reporting
 Know where you are on the plan at all times
 All meetings have agendas
 Budget versus actual ‐ accountability
 Issues that will impair the successful
completion of audit
 Issues requiring escalation
 Changes in scope / High risk findings /
Cooperation issues / Resource limitations
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 Maintain the same level of communication and
professionalism throughout.
 Determine formal escalation, change management and status
reporting procedures within the audit team.
 Use metrics for measuring progress and success and formal
internal updates.
 Extending timeframes should be a deliberate decision – know
when its another audit.
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Tools for Monitoring & Controlling
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Not meeting expectations – extending the

audit timeframe, not quickly issuing reports
– negatively impacts the credibility of audit.
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Timeliness
Timeliness = credibility.
If it is not timely, it is not relevant.
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Metrics for Internal Audit

Internal Audit Performance and Effectiveness
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Measuring Audit Effectiveness
IIA Practice Guide Measuring Internal Audit Effectiveness

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Performance Measurement
Basic Measures
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Performance Measurements
Additional Things to Consider:
 Balanced Scorecard
 Assurance of risk / control environment
 Surveys / feedback from management /
executives / audit committee
 Accepted recommendations / implemented
 Cost savings / cost avoidance recommendations
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Performance Measurements
Additional Things to Consider:
 Number of management requests for audits and
consulting form audit
 Reliance of external audit on internal audit
activity
 Budget to actual / hours planned to actual
 % of plan executed & completed
 Accuracy of planning cycle time of audits
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COMMUNICATION
PLANS
Formal internal and external
communication plans.
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What is Effective Communication?
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Effective Communication is…

 Two‐way information sharing.
 Active listening is as important as sharing
information.
 Delivering a message that is clearly
understood by the other party.
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Why is Effective Communication Important?
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Advantages of Effective
Communication
 Reduces conflict.
 Helps you meet your goals.
 Helps to develop stronger relationships.
 Helps you to be persuasive and have
others adopt your ideas.
 People will like you better – and yes, that is
a good thing even as an auditor!
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Rules of Effective
Communication
 Know your audience.
 Effective Communication if the responsibility of
the communicator. The person try to convey the
message.
 Tone and body language are 93% of in‐person
communication.
 Remember it’s not about you.
 If your approach isn’t working, try another
approach.
 Effective communication can change reality.
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There are three versions of all communication.
What you thought you said.

What you actually said.
What the other person heard.
It’s the same for reports and email.
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Communication
 Formal Communication Plan
 Internal Communication – Audit Team
 External Communication – Audit Client
 Realistic expectations for plan
 Predetermined
 Format / Method
 Audience
 Timing
 Escalation Plan
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Communication Requirements ‐ Client

 Know what your audit client wants.
 Each client will want a different communication plan
 Be clear and concise
 Use the language of the business, not audit language
 Less is more…always.
 Understand your culture
 Use visual representation whenever possible
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Meetings & Interviews

 ALWAYS send an agenda in advance.
 Formally introduce yourself and any colleagues
with you.
 Explain the processes and why the area is being
interviewed / audited.
 Designate a scribe.
 Practice active listening.
 Start on time and end early.
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Meetings & Interviews

 Formal setting – their office or a conference
room.
 Meeting / interview should be structured.
 Follow agenda
 Be prepared with a questionnaire or list of questions
– some based on the document research performed.
 Interview serves two purposes
 Information gathering
 Establishing rapport
 Use plain language or the business language.
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The two words 'information' and 'communication' are often

used interchangeably, but they signify quite different things.
Information is giving out; communication is getting through.
~Sydney J. Harris
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Communication
Know when each is
appropriate. Do not
hide behind email.
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Communication
Realistic
Consistency
Expectations
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Communication ‐ Internal
 Project Board
 Significant Metrics
 Budget / Actual
 Resource Allocation / Conflicts
 Weekly Status Reports – documented
 Weekly Monitoring / Controlling Meetings
 Daily Standup Meetings
 % of completion
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Communication – Internal
 Sync Ups – one on one with staff
 % of completion
 Pain points
 Learning Curves / Skill Development
 Questions & Answer session
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TIME
MANAGEMENT
Learn to formally manage your time.
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Time Management
 Prioritize, prioritize, prioritize.
 Overcome procrastination quickly and easily
 Plan your day and work.
 Develop a routine.
 Organize your workspace and workflow to make
better use of time
 Leverage delegation and teamwork
 Plan meetings more appropriately and effectively
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Time Management
Use time management methodologies
 Block and Tackle Approaches
 Use Outlook Calendar to block and dedicate time
for specific tasks and goals
 “Batch” email downloads
 Pareto ‐ 80/20 rule
 Urgent / Important Matrix
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Time Management
Urgent and Important, But
Important Not Urgent
• Crisis • Opportunities
• Problems • Progress
• Deadlines • High value
• Long term
Urgent, But Not Not Urgent and

Important Not Important
• Maintenance • Trivia
• Routine tasks
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In Summary
 Planning is the key to success, and understanding the business is key
to planning.
 Do the work in an order that makes sense.
 Everything you do should protect your credibility.
 Set realistic expectations and then meet them.
 Avoid scope creep.
 Plan for the unexpected. It’s not really unexpected after all.
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In Summary
 Use tools.
 Take the time to formally define scope for the internal team and the
client.
 Determine duration and dependencies for major tasks and areas.
Create a schedule (Gantt Chart). Everything will take longer than you
estimate theoretically.
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Questions?
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Thank you!
Contact Information
Bret Kobel
Email: bkobel@verracy.com
Telephone: (512) 658‐2228
Web: www.verracy.com
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Eight Ways to Improve Audit with Project Management

Mr. Kobel brings a diverse background working with

What is Project Management?

Project management is the application of

What does that mean?

© 2015 ‐ 2018, Verracy, LLC. 7

Why do projects fail?

© 2016 ‐ 2018, Verracy, LLC. 8

Budget vs. Actual

© 2016 ‐ 2018, Verracy, LLC. 9

© 2016 ‐ 2018, Verracy, LLC. 10

© 2016 ‐ 2018, Verracy, LLC. 11

Egyptian Project Management

© 2016 ‐ 2018, Verracy, LLC. 12

What are the most common problems in Audit?

© 2015 ‐ 2018, Verracy, LLC. 13

© 2015 ‐ 2018, Verracy, LLC. 14

Reasons Projects Fail

© 2016 ‐ 2018, Verracy, LLC. 15

Five Phases of a Project

© 2015 ‐ 2018, Verracy, LLC. 16

© 2015 ‐ 2018, Verracy, LLC. 17

One cannot change one without impacting the others.

© 2016 ‐ 2018, Verracy, LLC. 19

© 2016 ‐ 2018, Verracy, LLC. 20

In audit planning is focused on

© 2015 ‐ 2018, Verracy, LLC. 21

What % of time for the audit should be

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In order to plan properly, what do we need to do?

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Understanding the business…

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In auditing we do the same:

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Reading and Talking.

Then documenting our understanding.

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If you don’t know where you are going,

What kind of issues can that cause?

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Audit Engagement Planning

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2220.A1 – “…scope must include consideration

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Example – what other areas should be

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SIPOC – The best 20 minutes you can spend

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Defining Scope ‐ SIPOC

Suppliers Inputs Process Outputs Clients

Triggers the Feeds the Execution of Product of Recipient of

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S Suppliers The “who” or “where” the input comes from.

I Inputs The “what” that starts the process.

P Process The process including sub‐processes.