Beyond Audit. Robert L. Mainardi

other professional association conferences. He received a BS degree from the Pennsylvania State University, where he majored in Accounting and Business Law. He also earned a master's degree in Finance from Temple University. Plus, he has merited the Six Sigma Green Belt certification from the American Society for Quality, which recognizes the recipient for unique expertise in problem-solving and statistical analysis. He also has earned the Certified Financial Services Auditor (CFSA), Certification in Risk Management (CRMA) designations, and the Qualification in Control Self-Assessment.

CHAPTER 1 What Happened

      THINK BACK FOR A MOMENT. Do you even remember the beginning of the year 2020, which started with such promise? You probably made a couple of New Year's resolutions. Maybe it was something about your weight, exercise, or even your job. At work maybe you made a commitment to improvement. This was going to be your year – you were going to seek opportunities to lead jobs, take a leadership position, and maybe even get promoted. No matter what goals you set for yourself, you were certain you knew what you needed to do and how you were going to get there. You had a plan.

      The one factor every person has to consider when making a plan is to ensure that all possible and potential roadblocks to achieving the goals are identified and considered. Now, while there is no way to consider, document, and explain every reader's personal goals, I can definitely speak on the objectives of an audit department. For more than three decades, I have been a team member in an internal audit department and/or partnering with them to create the most effective and efficient internal audit operation. And while each department is unique, the methods, direction, discipline, execution, and oversight of the operation remains the same. So, let us focus on the audit department and how they entered the year with a plan and an energetic team filled with optimism.

In the same vein that an individual would set yearly goals, so does the audit function. The chief audit executive meets with the leadership team and discusses the company's direction and how the internal audit department is going to partner with each of the business leaders to ensure the operations in every division are being completed in the most effective and efficient manner. And in order to provide that validation, internal audit will ensure that the process design, implementation, execution, reporting, and oversight are producing the intended outcome, no matter if the result is a physical production or a process. The audit chief knows the key to delivering a value product to their clients is to recognize that each process will produce an outcome; however, the internal audit team must verify and validate the outcome is the intended or desired outcome according to the business process requirements. With the stated objective to provide this type of specific value to their clients, audit departments realize the discipline, focus, effort, and dedication it takes to deliver.

AUDIT EXECUTION CHALLENGES

      When the audit leadership team reviews all of the pertinent business activity data and comes together to discuss and create the annual plan, they consider the barriers the team will face to produce their quality product. These barriers include, but are not limited to, available hours both from a team and client perspective, data identification and availability, auditor experience and business knowledge, allocated time, as well as unplanned events. Now, I can assure you that when the audit leadership teams got together to build their 2020 plan, many challenges were discussed that could stand in the way of completing their audit plan. However, having the country shut down due to a virus was definitely not one of them. That being said, the audits that were in progress and the ones that remained on the plan when this pandemic hit the country must be completed. Multiple partners, both internal and external, need and rely on the audit results in order to plan the company objectives moving forward. But how is an audit department that relies on information, communication, and data from its business partners expected to complete the audit assignments when members of the department are no longer in an office where they can interact and obtain the necessary and critical information required to provide the quality validation of business operations?

As with any unplanned event, barrier, or obstacle, the team must adapt and improvise in order to overcome the challenges encountered and complete the assigned tasks. But how does an audit team or an auditor go about getting the critical information without meeting with the client to explain the needs and requirements in order to complete the job not only effectively but also accurately? Any auditor, whether experienced or not, will tell you that the internal audit and business partner relationship is the key to unlocking access to pertinent data and insight into the business process under review. Why is this relationship so important? The bold fact of the matter is, no one – either at work or in your personal life – is going to give you information regarding what, when, and how they do what they do unless they know and trust you. That is just human nature. And in your work life as an auditor, you already know that you are not going to be a person whom the business teams look forward to seeing on a regular basis. It is a stigma that has followed auditors since the beginning of the profession. In its simplest terms, auditors are there to ask the business personnel questions and verify that they are completing their assigned tasks as described, hopefully, in the policies and procedures. While the task at hand seems simple, any auditor will tell you it is a lot more difficult than it sounds – a prime example of saying it is so much simpler than doing it successfully.

      So how does one accomplish this task of information gathering and knowledge development if they are unable to meet with their clients in person? This is where the auditor's job becomes 10 times more challenging than it was before the pandemic. The focus of audit departments worldwide has shifted in the second and third quarter of 2020. It went from analyzing data, partnering with a client to explain deviations, and developing value-added recommendations to identifying new ways to obtain the necessary information to do their jobs.

      All internal auditors recognize the value that the business-level data has in the successful execution of audit engagements. Audit teams have become much more aware of how important communication, relationship building, and marketing the audit department has become in this new remote environment. For so long, internal audit departments have not placed enough emphasis on marketing their department in an effort to establish a strong foundation to build business partner relationships. If audit teams thought it was challenging before to get information from their business partners, they now face brand-new hurdles to leap over when it comes to acquiring data and information in this remote audit world.

The change that has been thrust upon the audit industry was not one that could have been predicted, but it certainly must be addressed if audit teams want to be successful going forward. There has been speculation that this remote environment could last through the coming year. If it was not evident before, each corporate executive and members of the corporate committees realize the critical role the audit department plays in the company and how much the business teams, regulatory bodies, external auditors, executives, and investors rely on the information produced and distributed from the audit teams. In order to address the needs of their internal and external clients, audit teams should take a step back and perform a self-evaluation of their internal process to ensure they have the following:

       Communication as the cornerstone of their department

       A commitment to building strong client relationships

       Focus on identifying and gathering data from a pure source

       Test plan developed from the business objective

       A report identifying root cause and linked to specific corresponding actions

      This reflection on audit department operations will show the reliance on communication through all phases of an audit from the detailed plan through testing to reporting and action plan development and adoption.

      How else would auditors be able to accomplish their assigned tasks if they did not have communicating effectively with clients as the number-one priority regardless of the audit phase or task? Unfortunately, not all audit teams emphasize client relationship development or communication skillsets when it comes to audit execution. Why? There is a misconception that the audit team can and will be given any data