Audit Advantage: Project Management, the Life Blood of Auditing
Audits are projects. From the most junior trainee up to director or partner level, we all manage projects or aspects of projects in some shape or form. At one end of the spectrum, many of us have never formally been taught any project management skills, we just figure it out as we go along. A few of us may have the coveted Prince2 (or one of the other gold standard project management accreditations). The majority of us are somewhere in between. So let’s take a timely look at the core principles of project management and how they apply to auditing.
What is a project?
According to the Project Management Institute¹ (PMI), a project is a ‘temporary endeavour undertaken to create a unique product, service or result’. A project is temporary in that it has a definite beginning and end. If you can’t tell when, or if, a piece of work is ‘done’ then it is simply ongoing operations and not a ‘project’. A project is unique in that it is not a routine operation, rather a set of activities to meet a specific goal. Consequently project teams often involve people who don’t usually work together. As an auditor you might have a portfolio of audit projects and, depending on your level of seniority, these might be made up of series of sub-projects, for example dividing an audit into account balances or processes. Completing your timesheet, on the other hand, is an ongoing operation, business-as-usual; it has to be done every day, in perpetuity!
What is Project Management?
From the PMI again, Project Management is ‘the application of knowledge, skills, tools and techniques to project activities in order to meet the defined project requirements’. As an auditor you are undoubtedly doing all of this every day in order to deliver results on time and in budget. Chances are you are doing this automatically and instinctively, so let’s take a look at the breakdown of the mechanics of PM.
The five stages of Project Management
- Initiating. The kick off stage. Defining the project in big picture terms, this presents the overall purpose and requirements of the project (eg ‘statutory audit of Widgets Ltd for the year ending 2018 with accompanying Management Letter’).
- Planning. The planning phase addresses how the project will meet its objective. Typically it involves determining budgeted costs, securing resources required and setting out a timeline with milestones. It also goes into the detail of assigning roles, responsibilities and accountability, breaking down the work into manageable sections and identifying and mitigating risk.
- Executing. This is all about getting stuck in and undertaking the planned tasks and it often runs in parallel with the next stage:
- Monitoring and Controlling. In audit work this phase is often cascaded down through the line of direct supervisors, with the Audit (Senior) Manager at the top acting as overall PM. Each supervisor reviews performance, progress and quality, determining if their (sub) project is on track and taking action to communicate and course-correct as appropriate.
- Closing. Whether this is reporting to management (‘closing meeting’), the audit committee or another stakeholder, this stage refers to the culmination of the project with the delivery of the defined output (for example, audit opinion, management report etc). You might be lucky enough to have an audit celebratory meal at this point! It is likely however that the PM (and probably the cascade of on-the-job supervisors) will be clearing up the snagging during this phase, ensuring that all documentation is completed and signed off.
Project Management in Audit: under-recognised, under-rated and under-utilised
The core objective of project management is to hit all targets within the specified constraints of scope, time, quality and budget. The key challenge is to optimise the utilisation of inputs and resources to give the best possible return on investment for the project.
Typically project management combines a broad spectrum of competencies, (in no particular order): resource management, leadership, problem-solving, people management, decision making, control and co-ordination, performance management and measurement, communication skills, delegation, team building and team playing, conflict management, negotiation, scheduling, forecasting, cost control, risk management and so on…
As an auditor, from the very start of your career you are doing these, almost unwittingly. I wonder if you really appreciate and leverage these skills. I wonder if you are breaking down project management into its individual components and show-casing these on your CV. I wonder…
Which topic would you like to read about next month? Look over the list of topics in the original Audit Advantage article here
¹ Information and definitions extracted from the PMI website, https://www.pmi.org/about/learn-about-pmi/what-is-project-management