OSAE sets the PACE ~Premier Auditing Consulting and Evaluations ! 1 Making Do With Less Making Do With Less Adapted from: Auditing in Tight Times & Making.

OSAE sets the PACE ~Premier Auditing Consulting and Evaluations!

1

Making Do With LessMaking Do With LessAdapted from:

Auditing in Tight Times & Making Integrated Audits Reality, Internal Auditor Magazine, April 2009Internal Auditors Doing More, Need More Training, Journal of Accountancy, March 2009

Department of Finance Office of State Audits and Evaluations

The Budget Crunch

The Budget Crunch

Times of budget cuts are the worst time to reduce audit resources and auditors.

How can chief auditors continue to provide assurance with less staff and smaller budgets?

The Budget Crunch

Reduce the time spent on each audit – Not preferable– Often first time audits – A lot of uncertainty of inherent and residual risks

Reduce the number of audits – Better than reducing quality– Auditors mistakenly believe they have to maintain

the same audit coverage as previous years

Tips to Manage Budget Cuts

Show the impactChange the risk profileInvest in yourselfFind efficienciesDon’t wait for the cutDon’t panic

Show the Impact

Discuss priorities with management

Be specific about the services being reduced or cut – Gives management a chance to request some

audits be kept and others cut instead

Show the Impact

If Management insists all audits are kept:– Review the scope of each assignment– Focus on high risk areas that offer greatest value

for resources spent– Be fully transparent about any objectives or risks

not addressed– This will make the report more useful and prevent

misinterpretation of the level of coverage

Change the Risk Profile

Focus on risks that could destroy stakeholders or stop the organization from building value.

Trouble can arise in lower risk areas when high risk areas are well controlled.

Coverage should be added to make sure low risk areas are, in fact, low risk areas.

Change the Risk Profile

Financial control remains important– Will we be able to collect on our contracts?– Will our contractors/suppliers go bankrupt?– Are cost saving measures delivering expected

benefits?

There are two areas gaining increased attention:– Strategic/Business risk– Operational risk

Change the Risk Profile

“Internal Auditors are expanding their roles beyond compliance to include advising on

business improvements and strategy, but their skills in these specialty areas may not be keeping up… internal audit’s traditional

competencies don’t fully meet the needs of today’s organizations.”

(Ernst and Young 2008 Global Internal Audit Study)

Invest in Yourself

“Lack of time dedication to training efforts is the key impediment to specialty skills

development.”

(Ernst and Young 2008 Global Internal Audit Study)

Invest in Yourself

Audit leaders should: – Promote their shop’s value– Redouble efforts to ensure work addresses changing risk

factors

Distinguish yourself by your credentials: – Professional education– Training– Additional certifications – Demonstrate excellence and quality of work

Find EfficienciesThoroughly examine audit operations to

stretch funding– Work smarter, better, faster– Avoid over-documentation– Make use of technology

Look at areas such as audit planning, development of risk assessment, and individual assignment planning

Find Efficiencies

“One truly integrated team, managing a comprehensive, integrated audit, can accomplish the work of two teams…”

(Helpert and Lazarine, Internal Auditor Magazine)

Find Efficiencies

Understand your organization’s approach to the three key processes:– Planning– Fieldwork– Reporting

Don’t Wait for the Cut

Be proactive: – Identify key issues in the organization – Speak with personnel

Look for tangible ways to help management:– Meet with them – Attend staff meetings– Inquire about pending issues

Don’t Wait for the Cut

Don’t be in the audit report and recommendation business, be in the “change” business:– Address risk and how to make the department better– Showing an audit’s worth might reduce cuts

DON’T PANIC!

You’ve still got control!

Don’t Panic

You can still decide:– What will be audited– When audits occur– Scope of the audits

If you have a mandate, an audit charter, a reporting structure, an audit universe, and a plan, then all the necessary components are already in place.