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The Internal Auditing Handbook Supplement Three Delegating Audit Work

The document discusses delegating audit work to more junior staff. It outlines the delegation process and differentiates between technical and practical delegation. Some tasks that can be delegated include audit manuals, brochures, and special projects. The benefits of delegation include developing auditors and generating new ideas. Barriers include inexperienced staff and lack of control. Managers must establish clear objectives and provide feedback when delegating work.

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86 views

The Internal Auditing Handbook Supplement Three Delegating Audit Work

The document discusses delegating audit work to more junior staff. It outlines the delegation process and differentiates between technical and practical delegation. Some tasks that can be delegated include audit manuals, brochures, and special projects. The benefits of delegation include developing auditors and generating new ideas. Barriers include inexperienced staff and lack of control. Managers must establish clear objectives and provide feedback when delegating work.

Uploaded by

tga
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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SUPPLEMENT THREE DELEGATING AUDIT WORK

THE INTERNAL AUDITING HANDBOOK

SUPPLEMENT THREE

DELEGATING AUDIT WORK


1 Background to Delegation
Audit management should delegate work to more junior staff. This can be a powerful way of not only
increasing overall efficiency, but also developing auditors. There are pros and cons although
delegation needs to be understood and controlled.

The delegation process


It involves conferring authority to perform defined tasks. Overall responsibility remains with
management who are accountable for the outcome. One view of delegation is:

FIGURE 1 THE DELEGATION PROCESS

Determine required results

Assign the audit project

Delegate authority for project

Establish suitable control mechanisms

Review outcome: does it equal required results?

Delegation in internal audit


We differentiate technical and practical delegation. In technical delegation the CIA is ultimately
responsible for the activities of the internal audit department. Audit managers are likewise responsible
for the activities of staff under their control. Delegation allows auditors to perform day-to-day work
unimpeded, around audit plans where each internal auditor has defined responsibilities. A restricted
definition of delegation is when what are normally management tasks are given to auditors in addition
to, or in place of, their normal workload. These extra and more demanding tasks/projects must be
carefully controlled. An example is the audit manual whose maintenance is the responsibility of the
CIA but may be assigned to an experienced auditor. Other examples are:
1. Audit brochures.
2. Marketing logos and material.
3. The annual report.
4. Client presentations.
5. Special projects.
6. Internal reviews of audit files.
7. Quality assurance programmes.
8. The audit charter.
9. Auditing standards.
10. Staff training and development.

Delegation is not abrogation of responsibilities. The CIA must be involved in matters that have a
major impact on the audit services and delegation must be used with care. This includes sensitive
topics such as confidential audit marketing plans, managing the audit budget, auditor discipline, the
audit committee, material complaints against auditors, and reviews of audit strategy. Advantages are
the positive effect on staff and getting work done. Key benefits are:
• Auditors may be able to do a better job than their managers.

© Spencer Pickett 1997 1


• Auditors themselves learn to delegate.
• New ideas may be generated.
• It acts as a communication device between managers and staff.
• It promotes trust across the internal audit department.

Delegation forces management to set clear objectives and define scope. Senior auditors may spend
hours on an obscure project that provides no end-product. Delegation creates the drive for the audit
manager to define and communicate exactly what is to be achieved. It must be based on trust between
parties each with differing needs:

TABLE 1 MANAGER/SUBORDINATE REQUIREMENTS


Manager Subordinate

Wants good results Enjoys the challenge

Wants to look good May make mistakes

Wants to save time Needs support

Wants no problems Wants it to work out

The audit manager must allow mistakes and this is part of letting go some managerial authority.
Management should reward increased performance in taking on more difficult work. Delegation
stimulates enhanced performance through opportunities provided. Problems result where additional
pressures create stress and lower the auditor’s ability to live up to the challenge. It is better to use the
extra effort to accelerate progress of the auditor’s career development, which is why a policy on
internal promotions can be useful. There must be real benefits.

Barriers to delegation
Bad experiences may remain in the manager’s mind where a task has been entrusted to someone who
has not delivered. Internal audit should charge for each hour spent on client projects and if time has
been misapplied and a project is unsatisfactory the client may not pay. The remedy is to isolate the
problems and ensure that they will not occur again. This is simple so long as the manager is
professional enough to admit to mistakes. Professional jealousy arises where the CIA or audit
management will not allow staff to shine. At its most destructive the CIA refuses audit managers
access to corporate management. All work reported directly to the Chief Executive and senior
Directors and is personally performed by the CIA. Work builds up, and the CIA has no time to
manage the audit function. Backlogs arise and post is left while the CIA tries to impress by insisting
on personally carrying out sensitive, confidential projects. This derives from the CIA’s insecurity and
mistrust of their staff. Other barriers include:
• Untrained junior auditors.
• Inability to understand the delegation process.
• Lack of time.
• Insufficient work available to the audit manager.
• Competition from subordinates.
• Fear of losing control.

Establishing control over the delegating process


Auditors have no excuses since the audit review process requires clear objectives, time budgets, and
quality standards. Control arrangements include:

FIGURE 2 CONTROLLING DELEGATION

2
SUPPLEMENT THREE DELEGATING AUDIT WORK

Decide which tasks can be delegated

Decide who should get the assignment

Delegate the assignment

Limit range of discretion

Establish a feedback mechanism

Each stage should be carefully thought about by audit management who must ensure the right work
goes to the right staff and there is a continuous check over progress. This is over and above the day-to-
day audit work within the normal scope of work for the grade of auditor. An example will help:

The CIA realised the audit manual was out-of-date. The task of updating this
was given to a senior auditor who had just passed professional examinations.
This person was interested in auditing procedures and newly published
material collected during studies. A budget was given and precise terms-of-
reference discussed with the CIA, audit manager and auditor. As each section
was produced it was reviewed by the CIA before the next one was started. A
weekly meeting was held with the manager and auditor to discuss progress.
Hours charged to the job were carefully monitored.

Discussion, objectives and scope, time budgets, quality standards, and frequent information all
enhance control. Motivation, career development and encouragement from audit management add to
this ability to direct and control tasks assigned to staff.

Degrees of delegation
There is a final point on the degree to which delegation is applied:

FIGURE 3 LEVELS OF DELEGATION

HIGH
Level of delegation

constant feedback &


mature staff
checks

immature staff confined work

LOW Level of autonomy HIGH

Delegation is accompanied by directions and may involve assigning a complete job along with
associated decisions. At the other extreme, it may entail the simple task of obtaining information and
handing it over intact to the manager for interpretation and further work. There is no reason why
delegation should not be employed to the full.

© Spencer Pickett 1997 3

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