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Tax & AccountingFinanceComplianceMay 07, 2020

Virtual auditing in practice

What have we done?

When adapting to the current work from home situation impacting most of us, prior to a pro-active risk assessment refresh the Internal Audit department at Wolters Kluwer has reactively reviewed the 2020 audit plan and shuffled a few audits around. More traditional entity-audits were pushed out toward the end of the year and we brought forward several audits that are more suited to being conducted in a virtual way. One such audit that is currently ongoing addresses the process and controls in place around vendor management from an enterprise wide perspective and serves as our “virtual audit” pilot.

Why have we done it

We chose this type of audit as a pilot for virtual auditing because the audit interviewees are dispersed over the globe and thus meetings would have been at least partially virtual anyway. Furthermore, this “thematic” audit was intended to address a less traditional topic on more abstract level and did not require physical inspections and other such activities that could only be done on location.

How have we done it

  • We are working agile. This situation has served to accelerate our strategic goal of becoming more agile. Whilst it’s taking time for the team to get used to doing things a little differently, the current environment is an additional motivator that has helped embed this way of working both mentally and procedurally. We are no longer just talking agile; we are walking agile.
  • Our department is eight people strong and for this audit everybody is joining the party. This has the added advantage that it has helped us keep in touch much more than ever. With a larger than typical audit team, the audit owner has clearly defined roles and responsibilities and provided a vision towards the end goal of the audit. This is aligned with the allocation of sections of work in TeamMate+.
  • Microsoft Teams is being used for video calls and for sharing of information and documents that do not belong or are not yet ready for placement in the audit file.
  • During the course of the audit, we are holding daily fifteen-minute standup video calls during which each auditor shares with the team:
    1. What did I do yesterday?
    2. What will I do today?
    3. What roadblocks am I encountering?
  • Initially there were concerns that daily calls would be overkill, but we have found that regular communication provides instant feedback within the team, minimizes gaps and delays, and also provides a social control that encourages input from everyone and helps keep us focused and on track both individually and as a team.
  • We created a more granular work program in TeamMate+, allocating audit procedures to one-week sprints, and are continually stressing the importance of documenting as we go. This has enabled us to create insightful burn down charts, which are used both internally to monitor our progress and to provide weekly status updates to the auditee.
  • Documentation that in the past would have been requested and initially reviewed at the desk of an auditee can now be obtained through screen sharing. And, it goes without saying that documentation that is obtained through email needs to be assessed for accuracy and completeness.

What have we learnt?

  • Monitoring of work in progress is in itself a work in progress. Continually pushing the team to document as they go is both necessary but also rewarding.
  • Building trust with the auditee, especially in these trying times, is key and not be underestimated.
    • Setting clear expectations with auditees is needed, for example, by sending them meeting agendas in advance of meetings.
    • Sending thank-you notes after meetings is appreciated, also within the team.
    • Whilst we miss some of the dynamics and nuances of face to face interviews, the use of video calls for interviewing has helped. It is important to let the auditee know when planning an interview that you would like a video interview rather than audio only.
  • Not everyone is equally well-versed in the usage of new applications such as Microsoft Teams. A more in-depth training will be scheduled soon to rectify this and, in the meantime, we are learning and sharing as we go along.
  • Whilst historically on-site in a more traditional manner, we have been able to adapt the way we work with TeamMate+ that had smoothed out some of the hurdles we have faced in the transition to a more agile approach.
  • Virtual working provides the opportunity to make better decisions, allowing auditors the time to take a step back and consider what really matters. There is now a gap between trigger and response.
  • Whilst some of the audit process changes have been necessary, we have also kept in mind that too much change at once can be difficult to execute effectively. Therefore, we have limited changes to the must-haves and postponed some of the nice-to-haves, for example exploring, Kanban methodology.

Where do we go from here?

  • This audit is still in flight. Once we issue a final report and request feedback from the auditee, we will conduct a post-mortem session following our standard process, during which all auditors provide feedback on what worked and what could be improved. The upcoming post-mortem will not only address items specific to this audit but will also provide feedback on some of our new ways of working, and we will consider what should continue once our world returns to normal.
  • What do we expect? It is a given that we will continue to accelerate the use of technology in a way that makes us more efficient and effective. We are no longer trepidatious about conducting audits in a more virtual manner. We will continue our internal collaboration through more regular communications.
  • We will continue to explore increased use of digital auditing data analytics.
  • Virtual auditing allows for the use of virtual audit teams which alone can encourage the inclusion of subject matter experts in specific audits. SMEs are more accessible if they don’t have to join the audit team in person. Within the Internal Audit department at Wolters Kluwer we are thinking of in-house data scientists, AI specialists, and compliance experts.
  • Lastly, the experience and practice we are gaining from performing virtual audits will enable us to get moving quickly as travel bans and lockdowns are eased.

For more a more detailed look at virtual auditing, see our white paper: A Practical Guide to Auditing Remotely.

Please stay healthy.

View Report: A Practical Guide to Auditing Remotely

Marc Lansdown
Director, Internal Audit
Marc joined Wolters Kluwer in 2009 and is currently Director of Internal Audit (Europe and ROW), based out of Alphen aan den Rijn. He holds a Bachelor’s degree in Commerce from the University of Sydney and is a Chartered Accountant.