The Agile Auditor: Project Management Insights for Assurance Services

If programmers in 2008 found it acceptable to call themselves “Code Ninjas,” perhaps it wouldn’t be too much of a stretch to give some sort of heroic nomenclature to other professions. Auditors, for instance, may be the “Batman” of the financial services industry. Batman, as the Dark Knight, works tirelessly to keep order in Gotham, to allow the city to operate as is was intended. Gotham, meanwhile, distrusts this hero and would sooner outlaw Batman than embrace the costs associated with his heroism. Similarly, Auditors find themselves serving those who often forget the importance of the role they perform. The client can temporarily forget that all the effort and externalities associated with an audit opinion ultimately allows the company to raise capital.

Auditors bring liquidity to capital markets. How? Auditing allows consumers to invest with confidence in public companies, providing assurance that the company does not engage in corrupt business practices or falsify financial information. It’s a noble profession, and a company could not raise capital without an auditor’s opinion. However, at the same time, companies can be rightly frustrated at the tremendous operational burden and cost of a year-end audit. While necessary, the audit is often a headache for the company trying to assert their financial position to the public.

The frustration involved in an audit is shared by both the company and the auditors, and is certainly understandable. The race to file the 10-K for a F100 company on time each year involves the review of thousands of client-provided documents, 16-hour days, and no weekends for the auditors. Clients, meanwhile, find themselves frustrated when documents are reviewed weeks after having been provided (or lost altogether). The audit team and the client find themselves confused about the actual status of the audit, with all of its moving parts, which results in a tremendous final effort to complete the project at filing time.

At the end of the day, an audit is a huge project management exercise than shares many similarities to software development projects. Like software developers, auditors work in small teams. Auditors also perform their work in silos, and review their work together at completion. Like software developers, auditors plan their project after gaining an understanding of requirements specific to the particularities at-hand.

Unlike software developers, auditors are engaged in a highly traditional profession that can date itself to the birth of capital markets. Software developers, on the other hand, are iconoclasts, parading through a naescent industry and toppling any idealistic pillar that has become irrelevant or ineffective. Auditors, of course, are willing to adopt new practices as well, but do so more slowly.

Software developers… are iconoclasts, parading through a naescent industry and toppling any idealistic pillar that has become irrelevant.

I would posit that auditors can reduce burden on their staff and clients, while still forming a valid opinion, if they were to consider project management principles that have birthed and evolved with the software development industry since 2000. In this series, I will compare the Audit Life Cycle to Traditional and Agile Life Cycles in Software Development. In Part 3, I will offer some practical and theoretical considerations for how Audit project managers can adopt Agile principles to increase project profitability and efficiency while reducing burden on the client. Stay tuned!

Jump to parts in this series:

Part 1: The Agile Auditor: Project Management Insights for Assurance Services (current)
Part 2: The Agile Auditor: Comparing the SDLC to the Audit Life Cycle (coming soon)
Part 3: The Agile Auditor: Applying Agile Principles to Audit Projects (coming soon)
Part 4: The Agile Auditor: Consulting Opportunities in Public Accounting (coming soon)