What Agile Means for Internal Audit

Appreciating the business conditions today and the need for flexibility in planning and engagement, audit leaders are interested in the benefits of adopting agile. Despite the clear benefits, though, departments face a big hurdle in figuring out where to start.

“Conventional audit planning processes and engagements follow clearly defined schedules and phases that at first blush seem incompatible with agile methods,” says Malcolm J Murray, VP and Team Manager, Gartner. “However, if audit adopts agile thoughtfully and takes into account the organizational situation, it can be incorporated into audit methodology.”

To identify which components of agile to implement, audit leaders must:

• Clarify the objectives of why they want to adopt agile
• Determine the level of change the team and the business is willing and able to make

Select agile based on objectives

Leaders must appreciate that different agile practices yield different benefits. Audit departments that wish to adopt agile methods must clearly define the objectives they seek to achieve through implementation.  

Audit leaders looking to enable efficiency and higher-quality outputs may consider implementing iterative sprints. Sprints help teams take an incremental approach until the desired output is achieved, ensuring that no resources are wasted. However, if team communication, collaboration and accountability are the desired goals, Kanban may be the appropriate approach. Kanban helps teams visualize a process, manage it and continually improve, while enhancing communication and collaboration.

“ Audit departments must tailor agile methods to meet their particular needs and objectives”

When selecting a single component of agile, it is likely that teams will also experience benefits associated with another agile component. For example, a team using Kanban may also see improvement in the quality of outputs, but these benefits are experienced to a lesser degree. If a combination of outcomes is desired, leaders should consider a hybrid approach.  

Determine implementation approach

After understanding which type of agile best fits the department’s needs, audit leaders should pick a framework for implementation. Each framework is designed based on change readiness and the degree of effort required to train and support audit teams and communicate changes to the business.

• The engagement-tailored approach offers flexibility and, potentially, less disruption to current methods. This approach treats agile methodology as one option among several types of audit activities.
• The modified approach positions agile as the default method for all engagement, but customizes the specific methods to suit the needs of the audit department.
• The full approach adopts agile concepts and methods as faithfully as possible in the audit context, so it requires the most significant level of change to audit methods.

Benefits of agile in audit

The clear benefits provide an impetus to enacting agile methods in the audit department, but variations exist within departments, and there is no one right solution. “Audit departments must tailor agile methods to meet their particular needs and objectives,” says Murray.  When done successfully, agile methods can deliver:

• Higher-quality insights. An iterative incorporation of feedback and retrospective meetings can lead to higher-quality audit insights. Increased communication between auditors and the business also improves the quality of findings.
• Faster insight generation. Rapid iterations during the project result in early insight generation and action from management. Regular stand-up meetings also enable rapid identification and solution of challenges that would otherwise stifle progress.
• Increased customer satisfaction. Auditees are engaged more thoroughly and consistently throughout projects. Agile methods that include regular meetings facilitate communication and entail interactions upfront, limiting the amount of back and forth during the engagement.