How Do I ... Budget Audit Time

Most internal audit departments base their audit budgets either on the amount of time spent on an audit, or on a calendar date by which to complete the audit. Typically, audit management establishes the department’s overall time budget during the annual audit planning process, and the auditors-in-charge and staff auditors are responsible for achieving the budgets for each engagement. Understanding why and how auditors budget their time and following common sense tips for meeting audit budgets can increase both the efficiency and effectiveness of the audit budgeting process.

MEETING A BUDGET

In-charge and staff auditors are typically charged with accomplishing an audit within the budget and time schedule established during the audit planning process. While there is no one-size-fits-all approach to achieving a time budget or delivery deadline, several practices provide a basis for success.

SET CLEAR, SPECIFIC OBJECTIVES AND SCOPE

Audit managers should provide up-front direction to the auditor-in-charge to help determine the objectives and scope of an audit. If audit management’s input arrives too late in the process, audit time may not be spent on the areas that originally prompted the review.

Auditors should avoid vague objectives that lack specificity. Some examples of unclear objectives include: “Evaluate the propriety of transactions,” “Improve the client’s operations,” and “Review the procedures of XYZ department. Well-crafted objectives, on the other hand, are detailed and specific, such as “Evaluate operation of controls in XYZ department at April 30, 2007, as defined by the COSO internal control framework.”

LOCK DOWN AN EXIT MEETING DATE

Auditors should establish a firm date for the exit meeting when the audit begins. Once the date has been communicated and agreed upon, audit teams must work efficiently toward meeting that specific date. This time pressure helps auditors stay on track and use their time efficiently.

REPORT AS YOU GO 

During the audit process, practitioners should communicate any findings to the client immediately, clearly identifying criteria, condition, and impact. Once these items are discussed, auditors can then agree on the findings’ cause and recommend actions. Performing these steps toward the end of the audit, rather than up front, could result in missed budgets or delayed issuance of the audit report.

AUTOMATE THE WORKPAPER PROCESS

One of the greatest advantages of automation is the ability to establish an overall workpaper structure from the start of the audit so that every workpaper can be filed correctly as it’s developed. Workpaper applications also save time by providing sign-off capabilities and cross-document referencing that are not possible without their built-in infrastructure.

Adapted from "Staying on Budget," by Larry D. Hubbard (Internal Auditor, "Back to Basics," April 2007).


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