Resources The Right Time Is Now To Transition To Agile Auditing

The Right Time Is Now To Transition To Agile Auditing

Embracing agility in internal auditing

We often hear the word “agile” from aligning remote and dispersed teams to managing cyber security risk. Internal audit work, under increased pressure to move faster, demands more agility to effectively manage emerging risks—enter the era of agile auditing

A recent survey on audit’s impact during a crisis found that 74% of internal audit teams updated their audit plans to address COVID-19 risks. As groups updated their audit planning on the fly, adopting an agile methodology could have helped them take a more strategic and calculated approach. Agile methodology has its roots in software development but has since been embraced by many industries and business functions, including internal audit. Instead of a traditional audit’s longer, single-phase planning, the agile audit process is centred around iterative, flexible planning in “sprints” (short bursts of planning, work, and increased collaboration).

We’ll explore ways to transition to agile auditing, but first, let’s look at some of the challenges that internal audit teams faced in the wake of COVID-19.

Compound challenges for internal auditors

The pandemic forced teams to work remotely. It introduced emerging risks and interrupted onsite audits. It stopped internal auditors from providing organisations with support and guidance. Even before the pandemic began, audit teams continuously strived to do everything quicker and more efficiently, usually without enough resources. And according to those surveyed, about a third of internal audit functions have experienced budget cuts due to COVID-19. And around a quarter are dealing with reduced staffing. So now, more than ever, auditors need to do more with less literally.

The right time is now to transition to agile auditing

Here are two other obstacles:

1. Communication challenges

Staying connected to coworkers and stakeholders while working in a hybrid or remote role isn’t easy. And because auditors can’t always perform physical audits, they must rely on technologies like live video feeds of client inventory locations or photos of evidence.

2. High assurance expectations

Organisations are always looking to internal audit teams to provide real-time assurance. There is increased pressure as internal audit as new risks emerge:

  • Supply chain disruptions. According to an Institute for Supply Management, almost 75% of global supply chains were impacted by COVID-19 disruptions. Did your organisation have enough resources to continue to operate sufficiently? Are you adding any new third-party risks to the mix?
  • The impact on human capital. From mental health programs to suspended hiring during COVID-19, what happened with the people in your workplace? Who managed which programs? How effective were these programs?
  • Cybersecurity risks. A crisis like COVID-19 introduced a myriad of new cyber threats. As more people worked remotely, were their devices secure? How was your organisation monitoring the security of collaborative cloud-based tools and user access?

To properly support the organisation, an internal audit must assess management’s awareness of all indirect and direct risks. Audit teams will lag behind in such a fast-moving, fluid environment if they strictly adhere to more traditional audit planning.

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How agile auditing makes it easier

While an agile audit methodology offers many advantages, we’ve chosen three to share here:

1. Enhanced communication

With an agile audit approach, communication is more frequent and informal, with regular check-ins and sprints. These pulse checks benefit remote teams and critical stakeholders, who are in danger of becoming siloed. Virtual stand-up meetings are short and help teams quickly understand what was accomplished yesterday, what will be completed today, and what might hinder progress.

2. Rapid recognition of emerging risk

Because agile audit relies a lot on data analysis, establishing risk indicators and trend analysis will alert the audit team to emerging trends that can be either positive or negative. Reacting to those emerging trends can mitigate significant impacts much earlier than traditional auditing techniques.

3. Real-time assurance

Because you’re working with accelerated delivery cycles, you can reassess your work every two to three weeks. This means that results and insights are realised more quickly, and feedback is faster. Teams can immediately incorporate their findings into ongoing development phases.

If implementing an agile auditing methodology seems daunting, especially right now, don’t worry. It’s important to understand that agile auditing isn’t an all-or-nothing approach. It’s OK to start small and use traditional auditing methods where and when necessary.

Four ways to start transitioning to agile auditing

  1. Self-assess your processes to see where and how to tailor agile for fit. Also, self-assess your current staff and determine their adaptability. Is your internal audit team ready for an agile audit at this time?
  2. Get management buy-in. An excellent place to start can be sharing a roadmap illustrating how an agile approach will add value. As mentioned above, rather than go “all in,” start with a trial or pilot to evaluate and update as needed.
  3. School your staff, whether bringing in a seasoned Agile audit team or working with an Agile coach. There will be a learning curve!
  4. Stock your toolbox with online project management and collaboration tools that can make your transition smoother with automated workflows, standardised templates, a built-in audit trail, and real-time reporting.

Agile Auditing