Making the Right Call on Internal Audit Staffing – Who’s in your Bullpen?
By Paul Mucha, Manager, Accounting Services
As fall approaches, baseball fans get excited to watch the pennant races unfold. Division rivals face each other to determine who moves on to postseason play and who takes an early vacation. And, as the games take on greater significance, they also tend to get longer in duration. It will become more common to see relief pitchers (or “bullpen” pitchers) called in to pitch to what may only be one batter. Of course, this is strategic, as a specific pitcher may be better suited to face a specific hitter.
This same strategy may be utilized in internal audit, with the “chief audit executive” acting as the baseball manager. The audit plan typically is established annually, which is the result of risk assessment activities. However, the audit plan often makes no provisions for unforeseen circumstances. Staff turnover (either within the internal audit department or at a client location), acquisitions and divestitures, reorganizations, system implementations or other situations may require changes to the audit plan timing.
Because internal audit engagements generally require extensive planning, fieldwork, travel and reporting, it’s easy to see that any changes to department staffing or audit engagement timing may disrupt the workload balance at all levels within the department. To ease this burden, it may be time to “go to the bullpen.”
Often, this means one of two things: relying on non-internal audit “guest auditors” from other departments/functions to support fieldwork, or relying on an external firm to provide staff augmentation services.
The advantages of the guest auditor approach are that it’s generally cost-effective, and also that the guest auditor may already have the systems access and/or knowledge of the business to “speak the language.” The disadvantages are that guest auditors may not be available at all times (remember, they have regular job responsibilities, too), and that they may not have the unique skillset that internal audit requires.
Engaging an external firm to provide staffing support offers a number of advantages. One, there’s likely greater flexibility regarding time commitments. The chief audit executive may utilize the external firm to the extent needed through the planning, fieldwork, and reporting phases. Next, it’s likely that the augmentation staff will be a dedicated internal audit/internal controls professional who is experienced in applying internal audit techniques and judgment. Third, an external resource provides a “fresh set of eyes” and may be able to offer insights regarding process or control improvements. The disadvantages of utilizing an external auditor is that it may be more costly on a project basis as compared to using internal resources.
To maximize flexibility and options for our clients, Marcum’s internal audit consulting group offers open-ended engagement letters, allowing for engagement on short notice. In baseball terms, it only takes a “call to the bullpen” to bring a specialist in. To discuss how Marcum can support your audit objectives, or for any other internal audit questions, please contact Randal Slifer at [email protected].