Investment brokerage firm
合规财务税务和会计16 十月, 2021

Sova Capital & TeamMate+ Audit

Few people get the chance to design their internal audit function from scratch, and this opportunity brings with it challenges, as well as advantages. Paul Hamill joined Sova Capital (‘the group’ and ‘the firm’) in January 2020 to set up a new best in class internal audit function and one of his initial tasks was to choose the software that would support the work of his team of three.

Standing start

Sova Capital is a diverse, niche brokerage and trading group with a small investment banking operation, a Russian research function, and asset management and venture capital offerings. It is based in London, Moscow, and Cyprus, providing access to more than 40 markets with a mix of institutional and corporate clients. Subject to regulatory approval, the firm will soon also complete its acquisition of a small European retail bank.

Before Hamill arrived, its internal audit services had been outsourced. The firm is regulated, and Hamill also had to be approved by the regulator under the Senior Managers & Certification Regime.

Hamill’s previous roles in a multinational investment bank and financial services group, and a consulting firm meant that he had experience with different internal audit software offerings, including ‘TeamMate AM’, so he arrived with a clear view of what he wanted to achieve. He was also keen to have the full buy-in of the team on the selected audit management software.

Red, amber, green

One of his first tasks was to create the firm’s audit universe and mapping its various risk management frameworks whether credit, market, liquidity, compliance, operational, tax, etc. Each of these risks were rated as very high, high, medium or low to determine the frequency of the audit coverage within the audit cycle. The audit universe also serves as a live and clear “heatmap” of the net risks shaded red, amber, pale green and dark green reflecting the expected audit ratings if the area were audited at any moment in time. The heat map is updated for the results of each audit as it is completed and other continuous auditing inputs.

The process is complicated by the fact that the firm is still acquiring new businesses, which need to be risk-mapped and added to the universe and the heatmap.

Hamill was also acutely aware of the importance of robust quality assurance and consistent audit standards. “Past roles included auditing global banking & markets, hedge funds, asset management, finance & tax; several years as Head of Governance and Methodology for a large global bank, working to ensure consistency across the bank 700 auditors, providing direct practitioner insights combined with in-depth knowledge of business and risk management function and controls,” he explains.

Hamill began by creating the firm’s audit universe and mapping its various risks whether credit, market, liquidity, compliance, operational, tax, etc. Each of these risks were rated as very high, high, medium or low to determine the frequency of the audit coverage within the audit cycle. The audit universe also serves as a live “heatmap” of the net risks shaded red, amber, pale green and dark green reflecting the expected audit ratings if the area were audited at that time. The heat map is updated for the results of each audit as it is completed and other continuous auditing inputs.

Hamill is a strong believer that a successful audit function plays an integral role in the continuing enhancement in a firm’s control environment where the heatmap trending should improve with each audit cycle.

The heatmap also allows him to chart who owns each risk, where it is based and the resources required to audit it, as well as the frequency with which it should be audited. He can then match auditors, audit days and budget to the risks according to their priority.

The TeamMate+ documentation trail also makes the system ideal for quality assurance purposes and allows myself to track the progress of all ongoing audits at any moment in time.

Strong foundations

This clear and detailed roadmap for a successful new internal audit team made it essential for Hamill and his team to find the right software to underpin it. “I knew what I wanted to achieve, but I needed the right software to make it possible,” Hamill says.

Initially, they considered four systems and quickly ruled out two. They then put the remaining two to the test.

The advantage of choosing a large, well-established vendor is that they can draw on their experience of what works for others. Some of the lessons that others have already learned are likely to work for you. Most internal audit teams look for fairly similar things, so you rarely need to reinvent the system entirely.
Paul Hamill, Chief Internal Auditor at Sova Capital

Hamill was already familiar with TeamMate+, but he wanted to consider alternatives, both to check that his positive preconceptions were justified and to see what his colleagues thought.

“Choosing new internal audit software is an important opportunity to assess where you are and where you want to be in the future, and to reconsider what you are already doing,” he points out. Narrowing down the selection to two alternatives, the selection process was duly thorough with detailed sandbox testing performed on TeamMate+ plus an alternative system which allowed the team to do end to end testing in each.

We had already mapped out what we wanted to achieve against the various standards and regulations we need to meet, and I liked the way that TeamMate+ logic is similar to that of our own methodology. However, it wasn’t actually until we went through the implementation process that it became apparent that TeamMate+ could be significantly customised to our requirements including replicating the heatmap even down to the shadings which was a pleasant surprise.
Paul Hamill, Chief Internal Auditor at Sova Capital

He also liked the way in which the system drives auditors to document the audit process and therefore adherence to the audit methodology, making the end to end audit lifecycle wholly transparent. “TeamMate+ is perfect when you create your working papers because it requires detailing of the risks, processes, controls, the testing, conclusions including findings,” he explains. “All documentation, emails, minutes, process walkthroughs, and testing in the end to end audit process can be logically filed, and hyperlinked to the relevant audit programme.

TeamMate+ allows you to customise audit process checklists to serve as milestone check points; and to add review comments with a clear audit trail through to their clearance and ultimate sign-off. 

Perhaps the single biggest benefit of TeamMate+ has been the ability to assign the reported findings and action plans to auditees for their ongoing updates through to completed status with supporting documentation for our validation; and the efficient extraction of data for monthly management information.

This documentation trail makes the system ideal for quality assurance purposes and allows myself to track the progress of all ongoing audits at any moment in time.

The team unanimously concluded that TeamMate+ was the only package that satisfied all our requirements, a sentiment readily supported by our Board Audit Committee.
Paul Hamill, Chief Internal Auditor at Sova Capital

TeamMate+ has provided Sova internal audit with significant efficiencies, which is even more vital for a small team, and a procedural robustness which is not so easy without such system. 

No audit management system in itself is a panacaea to robust audits, rather it is the audit approach, application and team experience which are the primary factors.  However, TeamMate+ has been transformative in helping Sova implement its bespoke methodology as efficiently as possible, and will undoubtedly stand us in excellent stead as we prepare for our inaugural External Quality Assurance in 2023, well ahead of the five year requirement, he adds.

The team had a number of bespoke requirements they needed to find solutions for during the implementation, but he says that the excellent support they received from the Wolters Kluwer trainer enabled them to customise the software and complete the initial training in just three days.

“Our Wolters Kluwer trainer was fantastic – he took the time to really understand our audit methodology, our company structure and audit universe, and helped us find the right solutions to enable us to get the foundations right from the start,” he says. “We practised in the system until we were comfortable moving around in it, finding the relevant documents and inputting data, and in further customising the system. It was important that we could be up and running seamlessly being a small team delivering on an ambitious audit plan.”

It did move fast. The software purchase was signed off in October and the team had three days’ training in November. They spent the holiday period inputting current data and issues into the system. Before the full go-live in February, Hamill personally trialled TeamMate+ in the secure development environment on an actual audit, and immediately knew the hugely important decision had been the right one. Nine months on, this sentiment has only strengthened.

“The preparations should not be under-estimated but the launch to the production environment was seamless with no notable glitches,” Hamill says. “We issued internal communications to stakeholders including simple ‘how to’ instructions to auditees who would be required to update the status of action plans directly in the system, but everything went smoothly and no action plans, for example, were misallocated. Even the first suite of management information we produced was fairly streamlined, automated and problem free.”

A clear structure

One key attraction was the way in which it enabled them to record and track progress and move away from spreadsheets and Word documents filed on shared drives.”

“I particularly like the fact that information and data is input in real time – we document all meetings and can readily logically file and hyperlink documents received to the relevant audit programme so they are available for efficient future reference if anyone needs to refer back to them,” Hamill says.

He particularly appreciates the way that using TeamMate+ creates a structured audit process. “No matter how experienced the internal auditor, the system aligns people to do things in a structured manner. It won’t by itself make your audits better, but it makes for efficient review throughout audits to highlight potential gaps in the testing and/or processes quickly and should prevent you from signing work off that hasn’t been completed properly,” he says. “In this way, it keeps people focused and honest and ensures that everything is done to the consistently high standards demanded by our audit methodology.”

According to Hamill, perhaps the single biggest benefit of TeamMate+ has been the ability to assign the reported findings and action plans to auditees for their ongoing updates through to completed status with supporting documentation for our validation; and the efficient extraction of data for monthly management information.

If asked for advice by someone else contemplating buying software, Hamill would tell them to focus on their core requirements before focusing on the customisation opportunities. “Our audit universe is quite specialised and the system exceeded our expectations that it could be customised to our exact needs,” he says, “but if you just were not so demanding and followed the standard TeamMate+ methodology, you probably wouldn’t go too far wrong.”

Hamill is confident that the system will continue to bring efficiencies to enable his small team to complete the entire audit cycle on track.

Sova’s Internal Audit has established itself as a robust third line of defence in a relatively short timeframe, providing value added audit recommendations to assist the firm continue to enhance its robust control environment for its shareholders, clients, employees and other stakeholders.

For auditors who are challenged to improve audit productivity while delivering strategic insights, TeamMate provides expert solutions, delivered with premium professional services, to auditors around the globe and in every industry.
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