Published on: Sep 11, 2020
Agile Internal Auditing
Agile working practices were originally developed as an efficient and effective way of iterating in software development. Agile principles value individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation and responding to change over following a plan. Agile emphasizes an iterative structure that provides flexibility, efficiency, and increased transparency. In practice, this means rapid planning and task prioritization, weekly 'sprints' for goal setting, daily 'scrum' meetings to check on progress and regular periods to reflect on what has been achieved and to plan the next stage of activity.
This process can also be applied to auditing, where there is a growing imperative for organizations to adopt more fluid ways of working between functions and operational silos. For auditors, the challenge is to learn how to audit in an agile environment, understand the 'agile' language and its implications on audit methodology.
What is Agile Auditing?
Agile auditing defines a shorter path to more insightful results with on-going one-to-two-week 'sprints' where stakeholders are engaged earlier and more frequently. The main difference between agile auditing and traditional auditing is the lack of rigid, single-phase planning. Where traditional auditing focuses on detailed planning far in advance of the audit, agile auditing adopts a more flexible, iterative process by focusing on shorter "sprints" of planning, work, and collaboration.
Agile auditing also focuses on continuous communication and collaboration within the audit team and with audit stakeholders. This approach ensures that interactions occur not only frequently but at every stage of the process, fostering a dynamic exchange of ideas and feedback.
A key element is the involvement of both the audit/compliance team and the business process/control owners. By engaging these parties consistently, Agile auditing breaks down silos, encouraging a more unified effort towards achieving audit goals.
Moreover, this methodology nurtures a culture of compliance throughout the organization. By embedding communication and collaboration into the auditing framework, Agile practices help build an environment where open dialogue is the norm, enhancing transparency and trust across all levels of the company.
Why Adopt Agile Internal Auditing
Refined Planning
Agile internal auditing is flexible and iterative. This means that instead of rigid planning for audits, the audit process is continually updated based on priorities that can be actioned when resources are available. This allows for more frequent communication of results through dashboards and updates instead of a single, formal report at the end of an audit.
Rapid Adaptation to Changing Circumstances
Agile auditing allows organizations to continually reassess their priorities and focus resources as priorities change. After each 'sprint' cycle, the audit team reviews and adjusts priorities and tasks. This allows the team to identify issues as they arise instead of at the end of a lengthy audit process. Additionally, Agile Auditing delivers real-time assurance of compliance instead of assurance for a point-in-time only.
Empowered Audit Teams
Where traditional audit teams have a fixed hierarchy of positions and responsibilities, agile auditing adopts a flat team structure. This empowers each member of the team to change direction to focus on priorities during each "sprint" period. An agile approach helps auditors reduce low value work and achieve efficiencies by focusing on higher value priorities. Less experienced members of audit teams have greater involvement and more opportunity to gain experience and demonstrate competency. Audit teams stay together during audits which is more efficient and effective than continually moving people into different teams.
Accelerated and More Flexible Delivery
With an agile approach, auditors report results at the end of each 'sprint' period, instead of at the end of the audit. This allows for much more rapid planning, fieldwork, and reporting than traditional auditing.
Increased Value and Insights
By streamlining the audit process, agile auditing helps focus attention on insights, risks, and opportunities that are the priority for stakeholders. Agile allows auditors to better adapt to the various requirements of managers.
Moreover, Agile auditing emphasizes identifying and analyzing the highest-risk business processes and controls within an organization. This approach compels the entire company to fully assess and prioritize its risks. As a result, there is a greater organization-wide understanding of what requires the most immediate attention.
Agile auditing fosters real-time (or near real-time) performance assessment of accompanying controls.
It ensures that the focus remains on critical areas that need strategic oversight.
By integrating these practices, organizations can enhance their responsiveness and adaptability to emerging risks, ultimately leading to more informed decision-making across all levels.
Improved Stakeholder experience
Agile auditing leads to a better experience for stakeholders as assurance of compliance is provided earlier in the audit process. There are additional opportunities to reduce misunderstandings throughout the process.
Conducting Agile Audits
There are several methods that organizations can use to facilitate agile auditing:
Audit profile canvas: An audit profile canvas is a short planning document that is produced by the audit team and key stakeholders. It articulates the high-level goals and principles of the audit. The profile canvas helps to keep auditors focused on the overarching goals of the process in a format that is easily understood.
Scrum & User stories: A user story is the basic unit of work representing some value to the audit, or the requirements for the audit. A user story should have enough detail to enable the project team to make planning decisions by capturing the key elements "who," "what," and "why" in a simple and concise way.
Kanban board: Kanban is a simple and effective visual method to monitor progress of internal audit activities. It includes specific activities to be performed, activities in process and activities that have been completed. Kanban provides an end-to-end view of an audit or sprint cycle, which helps audit teams focus and prioritize activities.
Specialized software: audit specific tools or governance, risk, and compliance (GRC) platforms that integrate with information security management systems and other controls, to streamline auditing processes. Most tools can integrate with existing systems and monitor controls from a single, centralized platform and produce invaluable reports on critical areas.
Moreover, leveraging technology in Agile auditing can significantly enhance communication and collaboration by integrating with a wide array of services.
Cloud Storage and Project Management: Seamless integration with cloud storage and project management tools allows for efficient document sharing and task tracking. This ensures that all team members are on the same page, fostering better collaboration.
Communication and Business Applications: By connecting with communication platforms and business applications, these tools allow for real-time updates and discussions, ensuring that teams can respond swiftly to any changes or challenges.
Cloud Infrastructure and DevOps: Integration with cloud infrastructure and DevOps services enables continuous monitoring and quick adaptation to evolving requirements, crucial for Agile auditing.
These technologies fit seamlessly into your existing business processes and workflows, allowing for a cohesive auditing experience that enhances both efficiency and effectiveness. With such integrations, organizations can ensure that their auditing processes are not only streamlined but also adaptive to the dynamic nature of Agile environments.
Many teams have implemented agile auditing for its flexible and iterative approach. Agile internal auditing shortens the path to more insightful results by adopting reoccurring 'sprints' instead of rigid, single-phase planning. These methods have shown to improve efficiency of planning, rapid response to changing priorities, empowered audit teams and increased value and insights.
How Can Dedicated Software Platforms Help?
Dedicated software platforms can be a game-changer in developing audit plans and monitoring project completion. Here's how:
1. Centralized Planning:
These platforms offer a centralized hub where you can design detailed audit plans, assign tasks, and establish timelines. This ensures that everyone involved is on the same page from the outset.
2. Enhanced Visibility:
Such systems provide comprehensive project visibility, allowing teams to effortlessly track progress. Stakeholders can quickly identify the current status of any element within the audit process, facilitating timely interventions if needed.
3. Real-time Updates:
With real-time data and notifications, users are always aware of developments. This means fewer surprises and more proactive management, ensuring the audit stays on track.
4. Collaborative Tools:
Most platforms integrate communication tools that enhance collaboration between team members and departments. This fosters a seamless workflow and ensures that no task is overlooked or delayed.
5. Analytics and Reporting:
Powerful analytics features are often included, enabling teams to generate insightful reports. These reports highlight audit performance and adherence to plans, which is crucial for informed decision-making.
6. Automated Reminders and Alerts:
Platforms often come equipped with automated reminders and alerts that help teams stay on top of deadlines, reducing the chances of missed tasks and improving overall compliance.
Utilizing a compliance operations platform equips businesses with the tools and insights necessary to streamline audit planning and ensure efficient project completion.
How Agile Auditing Boosts Confidence Before Facing External Audits
Agile auditing plays a crucial role in enhancing preparedness for external audits. One of the primary advantages is its emphasis on continuous monitoring. By regularly assessing and updating internal controls, organizations can maintain a real-time understanding of their compliance status. This ongoing process ensures that any potential issues are identified and addressed well before auditors arrive.
Moreover, agile auditing encourages a proactive approach to compliance management. Teams are better equipped to identify gaps and implement corrective actions swiftly, reducing the risk of non-compliance surprises. This proactive stance not only fine-tunes the organization's compliance framework but also instills confidence among internal stakeholders.
In addition, the increased visibility provided by agile practices enables clearer communication and coordination between internal teams. When everyone has an up-to-date, comprehensive view of compliance status, collaboration becomes more effective. This collective effort results in a synchronized approach, facilitating smoother interactions during external audits.
In summary, agile auditing fosters an environment of continuous improvement and readiness, ensuring that organizations are not just prepared, but confident when it's time to meet with an external auditor.
How to Complete a Risk Assessment in an Agile Auditing Approach
To effectively complete a risk assessment within an Agile auditing framework, start by pinpointing the specific processes you wish to audit. The goal is to ensure resources and efforts are concentrated where they have the most impact.
Steps to Complete the Risk Assessment:
Identify Risks: Begin by identifying both current and potential risks your organization may encounter. This step is crucial to know which areas require the most attention.
Understand Consequences: For each identified risk, evaluate the potential consequences. Assess what impact these risks may have on your operations, financial health, or compliance requirements.
Evaluate Existing Controls: Examine the controls currently in place to manage these risks. Consider whether these controls are sufficient or if there are gaps that need to be addressed.
Prioritize Risks: Once risks and controls are mapped out, prioritize them based on their potential impact and likelihood. This allows you to focus on high-risk areas first, ensuring efficient use of resources.
Develop Your Audit Plan: With a clear understanding of the risks and their implications, craft an audit plan that targets these areas. The plan should be adaptable, reflecting the Agile approach, to respond to any changes in the risk landscape promptly.
By following these steps, you'll build a solid foundation for your Agile auditing plan, focusing on areas that bear the most significant risks and ensuring your organization is well-protected.
Automating Evidence Collection in Agile Auditing
In the realm of Agile auditing, gathering evidence of control activities can be significantly expedited through automation. Here's how:
Leverage Technology to Streamline Evidence Gathering
Adopt GRC Software: Start by integrating GRC management tools, like StandardFusion, with your existing operational systems. These software solutions are designed to automatically pull compliance-relevant data and reports from various systems you use daily.
Centralized Data Collection: By syncing these tools with your existing systems—like ERP or CRM platforms—all relevant reports and evidence are automatically gathered into a single repository. This eliminates the need for manual data collection and minimizes the potential for human error.
Benefits of Automation in Auditing
Reduced Waiting Periods: Automation helps in minimizing downtime, allowing auditors to access necessary documentation instantly. With evidence ready at hand, the audit team can test controls without unnecessary delays.
Enhanced Efficiency: Automating the collection process ensures that no critical information is overlooked. It enhances the efficiency of audits by providing real-time access to data, aiding in quicker decision-making.
How to Automate Evidence Collection for Control Operations in Agile Auditing
Incorporating automation into evidence collection for control operations can significantly enhance the agility and efficiency of your auditing processes. Here's how you can streamline this critical task:
Use Compliance Software: Implement compliance management tools that integrate seamlessly with your existing operational systems. These tools can automatically collate compliance-relevant reports from across your systems into a centralized location, simplifying access and review.
Leverage APIs and Integration Tools: Utilize APIs and integration platforms like Zapier or MuleSoft to connect disparate systems. These connections facilitate the flow of data between systems without manual intervention, ensuring that evidence is readily available when needed.
Implement Continuous Monitoring Tools: Adopt continuous monitoring solutions that automatically track and document control performance across your business operations. These tools can provide real-time data and alerts, allowing for immediate evidence collection and reducing the time spent during audits.
Develop Automated Report Generation: Set up templates that automatically generate compliance reports based on predefined criteria and data inputs from your systems. This automation reduces the manual workload and minimizes human error, ensuring consistency and accuracy.
Schedule Regular Data Syncs: Arrange for routine data synchronization between systems and compliance platforms. This ensures that the latest information is always captured and ready for audit purposes, further reducing the lag time in evidence collection.
Automating evidence collection not only accelerates the audit process but also enhances data security and accuracy. By integrating modern technology solutions, your audit team can conduct more thorough and timely assessments of control operations.
Defining Cadences in Agile Auditing
In Agile auditing, establishing effective cadences for monitoring controls is essential for maintaining compliance and ensuring timely reviews. Here's how you can define these cadences:
Use Task Management Systems: Implement task management tools that allow you to schedule and organize reviews of controls. These tasks can be set as either one-time actions or recurring events based on your needs.
Set Clear Deadlines: Clearly define deadlines for each task. This ensures that control reviews occur consistently and helps maintain accountability among team members.
Automated Reminders: Leverage features within your task management system to send automated reminders to control owners. This keeps reviews on track and reduces the risk of missed deadlines.
Regular Updates and Adjustments: Regularly update and adjust cadences as necessary. Agile environments change rapidly, and your audit schedule should be flexible enough to accommodate these changes.
Leverage Technology for Workflow: Utilize platforms that facilitate workflow automation to streamline your control monitoring. This reduces manual oversight and allows your team to focus on critical tasks.
By integrating these strategies, your Agile auditing process can efficiently manage and prioritize control monitoring, ensuring that reviews are systematic and timely.
Steps to Implement Agile Auditing in Your Organization
Implementing Agile auditing in your organization is a journey that requires a strategic approach. Here's a comprehensive guide to get you started:
Conduct a Risk Assessment
Begin by thoroughly assessing the risks your organization faces. Prioritizing which processes to audit requires an in-depth understanding of existing and potential risks, along with their possible impacts. Evaluate how well these risks are managed and identify any gaps in control measures. This foundational step sets the stage for a focused and efficient Agile audit plan.
Engage with Control Stakeholders
Engage in meaningful discussions with those who manage key controls. Understanding how risks are mitigated through existing controls is crucial. These conversations help ensure both the audit team and control operators are aligned on the evidence needed to demonstrate effective control processes. Additionally, identify any overlaps in compliance activities with other departments to streamline efforts.
Leverage Automation for Evidence Collection
Streamline the evidence collection process by leveraging technology. By integrating compliance software with your current operational systems, you can automate the collation of compliance-relevant reports. This automation reduces delays and empowers the audit team to assess control operations more quickly. Automation is integral to maintaining the fluidity of Agile auditing.
Implement a Project Management Framework
Choose a project management framework that complements Agile methodology. Frameworks like Scrum and Kanban are designed to enhance teamwork and improve efficiency through structured processes. Consistency in using these frameworks will help maintain agility and collaboration across teams.
Develop a Detailed Audit Plan
After gathering insights from risk assessments and stakeholder interviews, formulate a comprehensive audit plan. This should include a step-by-step guide detailing each phase of the audit. Responsibilities and expectations should be clearly defined so that control owners can confidently manage and verify their control processes.
By following these steps, your organization will be better positioned to adopt Agile auditing practices that promote efficiency, collaboration, and adaptability in compliance efforts.
Why is Interviewing Control Stakeholders Important in Agile Auditing?
In Agile auditing, interviewing control stakeholders is a crucial step. Here's why:
Understanding Key Risk Areas
First and foremost, these interviews help auditors gain a deep understanding of key risk areas. By engaging with control stakeholders, auditors can discover how risks are currently being mitigated through existing controls. This insight is essential for tailoring agile audit processes to effectively test these areas, ensuring that any vulnerabilities are swiftly identified and addressed.
Clarity in Evidence
Moreover, discussions with stakeholders clarify what evidence is needed to demonstrate the effectiveness of control processes. This mutual understanding between the audit team and the control operators ensures that the evaluation of controls is both accurate and efficient, minimizing misunderstandings and rework.
Identifying Overlaps and Efficiencies
Another significant benefit is identifying overlaps between compliance efforts and other initiatives within the organization. By understanding the broader context in which these controls operate, auditors can pinpoint where compliance tasks may align with other team functions. This awareness not only enhances efficiency but also fosters collaboration across departments.
Impact Awareness
Finally, through engaging conversations, auditors become aware of how compliance-focused activities impact different teams. This understanding helps in managing resources better and optimizing audit processes without disrupting day-to-day operations.
In summary, interviewing control stakeholders is indispensable in Agile auditing. It provides a nuanced understanding of risk areas, ensures clarity in the evidence needed, identifies overlaps for improved efficiency, and enhances awareness of the impact on various teams.
How to Effectively Present Agile Auditing Findings to Leadership
Agile auditing provides a streamlined approach to identifying and addressing organizational risks. This methodology ensures that key information is organized and accessible, which simplifies the process of sharing insights with leadership.
Document Critical Risks: Begin by compiling a detailed record of the major risks identified during the audit. Make sure this documentation is clear and concise, highlighting the areas that require immediate attention.
Mitigation Strategies: Alongside the risks, outline the strategies and actions already in place to address these issues. This shows leadership that there is a proactive approach to risk management.
Compile Comprehensive Reports: Gather the documented risks and mitigation strategies into comprehensive reports. These reports should be formatted to highlight key findings prominently, allowing leadership to quickly grasp the scope and status of each issue.
Regular Updates and Status Reports: Develop a process for generating frequent updates and status reports. This keeps leadership informed of any changes or progress, ensuring they have up-to-date information at their fingertips.
Visual Aids and Dashboards: Utilize visual aids such as charts, graphs, and dashboards to make complex data easy to understand at a glance. Tools like Power BI or Tableau can turn raw data into impactful visuals.
Align Reports with Business Goals: Make sure all findings and recommendations are aligned with the organization’s strategic objectives. This adds context to the findings and demonstrates how they impact overall business goals.
By organizing data methodically and using clear communication tactics, Agile auditing findings can be effectively presented to decision-makers, facilitating informed, swift decision-making.
Measuring the Success of an Agile Audit
Evaluating the effectiveness of an Agile audit involves focusing on specific metrics that indicate improvement and efficiency. Here's how you can gauge success:
Time Efficiency
One of the primary benefits of Agile auditing is increased efficiency. Compare the duration of Agile audits with traditional ones. Ideally, Agile audits should be swifter, minimizing administrative overhead. This time saved can then be leveraged by stakeholders to invest in more strategic projects.
Speed of Responsiveness
Agile practices employ short, iterative cycles known as sprints. By consistently delivering recent data, organizations can make swift decisions regarding risk management. Observing the responsiveness—such as how quickly teams implement changes in key domains—can reveal the efficacy of the Agile auditing process.
Enhanced Communication and Collaboration
Agile auditing naturally fosters an environment of open communication and collaboration. Stakeholders should find it easier to break down silos and work together more effectively. Tracking improvements in inter-team communication and the speed of action on required changes provides insight into the success of this process.
By adopting these metrics, organizations can effectively monitor and ensure the success of their Agile auditing efforts.
