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The Top Ten Internal Audit Bete Noires – Countdown 10 to 6. October 10, 2009

Posted by Audit Monkey in The Joy & Pain of Internal Audit.
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So here it is. You go to University, you study to become an Accountant, you qualify after years of study and exams, you wind up in Internal Audit. You thought it would help you climb the career ladder, thinking you would be entering a professional world and leaving idiocy and mediocrity behind. Think again. The Top Ten Internal Audit Bete Noires will confirm that flipping burgers for a living would be a more rewarding occupation.

10. The Working Paper Debate

You couldn’t make this one up but from bitter experience, it’s the one Internal Auditors love to debate, especially for hours at end. Working papers are quite simple but these need to be structured and will support audit methodology. Hours will be spent discussing the most appropriate structure. Needless to say, this is a rather dull and tedious preoccupation but often drones on ad infinitum.

As an auditor, you should have a degree of competency and reasoning to assess the quality of a system or process. If you can’t organise your own work, how can you justifiably critique the systems and work of others?

9. Graffiti Style Cross Referencing

You spend time preparing a beautifully presented manual audit file, fully cross-referenced, etc, only to find that the reviewer has sought to ‘add value’ by adding additional cross references (manuscript annotations) to the working papers. I wouldn’t mind but in my experience, these often resemble the collective work of tag artists of South London or the output from an ECG machine. In short, it isn’t pretty and of negligible value.

8. Recycling File Dividers

I know it beggars belief but I really do find the recycling of cardboard file dividers cheeseparing and supremely irksome but you will be surprised how frequently this occurs. I like to take some pride in my work, so I don’t think a 30p set of file dividers from the stationery cupboard will compromise the bottom line. Just think about all the lost billable hours I’ve spent trying to collate a complete set which don’t differ in shape and size.

7. Overzealous File Review

Yes, it could be the simplest system in the world, e.g. opening a paper bag, but if you think the peer review will be proportionate, think again. You have planned the audit, completed the fieldwork (testing) and drafted the report but no, there are a thousand and one review points to clear before the draft report can be issued. These can banal, e.g. you haven’t cross referenced some working papers but often arise as the reviewer hasn’t read the working papers properly or understood the system (alternatively known as WTF is going on).

6. Rewriting Audit Reports

The bane of my life. You write a perfectly understandable audit report but either the reviewer or senior manager in the hierarchy decides that this isn’t sufficient or appropriate and rewrites the report. This can vary from a couple of sentences to an entire regurgitation.

Some observations. If another author contributes to the report, this can be detrimental as it can change the context of the report and substance of the findings which the original author (who is more au fait with the system) wished to convey. The change in emphasis can be too harsh or too soft.

Some real life examples. I suspect one Head of Audit I worked for revised a draft audit report because he was a close friend of the auditee and wanted to convey a more favourable impression of control environment than was otherwise the case. In another instance, the Head of Audit (the Führer who made me redundant) was so ignorant, he rewrote the reports in his style so he could understand the nature of the issues being reported. He eventually floundered as some of the subject matter was eventually beyond him intellectually and he was unable to edit the reports.

The irony is, recipients of internal audit reports, e.g. Finance Directors, CEO’s, will read audit reports very quickly unless the contents are ‘mission critical’ as they are fully occupied with other matters and internal audit isn’t the centre of their universe.  I think this point is often lost on Internal Auditors who continually reiterate reports in search of perfection.

So there is the bottom half of the draw. The top five to follow.

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