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Time Management and Project Overruns

An Advisory

By
Kastuv Ray

Introduction

Timing is very important to the delivery of an internal audit project. Much more so if you work in outsourced internal audit where the directors and managers are concerned about profit and chargeable time. Effective time management can be compared to effective budgetary control. The approach taken in this article will be to look at time management from the angle of an outsourced internal audit provider.

Setting a Budget

A time allocation is set for each audit as per the Strategic Audit Plan. Say, for example that we are going to undertake an audit on Payroll, the total number of days set for the budget may be 15 days. This would then be divided into times for each person on the job, so 1 day for the Manager to review the file and draft report, 6 days for the Senior Auditor to write the audit brief, document the systems and complete a control evaluation, set up testing, review the work of the auditor, complete the exit meeting form with recommendations, time for exit meeting and write the draft report. This would leave 8 days for the auditor to undertake the testing.

This budget allocation and time should then be fed into a computerised time management system.

Control of Work

There are plenty of systems available on the marketplace, which can aid an internal audit provider in recording hours spent on assignments. With the one that I am suggesting, codes are set up for each type of audit and a reference number attached to the assignment. An allocation is stipulated for the work, which in the case of the payroll audit is 15 days. An expected start time and end date is then established. Time cannot be input to the project before the start date unless it is manually overridden. Once the audit is started, the auditors record their hours on the timesheet. I would always advise auditors to keep a manual record of hours worked or a photocopy of their timesheet prior to submission.

Timesheets are submitted each week and then approved by Management. There should also be the facility on the system to make notes – for example if a project is delayed because say the Payroll Department didn’t produce the starters or leavers report on time or because Internal Audit were performing work towards the end of the tax year and were subsequently turned away. There can be any number of reasons for delays. There should be a facility on the system, which does not let, the individual allocate more time to their audit after the limit for allocated units has been exceeded. For example if the auditor, tried to type in 9 days of work, the system should reject this input.

Project Overruns

With respect to budgetary control, managers should have to formally account for variances on a monthly basis. If there are ever cases of project overruns on an audit for whatever reason, the approach, I would suggest is to have a clear written procedure within the organisation for recording completing timesheets and work on assignments. This should be promulgated to all employees. The provider should also sign an agreement with the client as to the approach to be taken when requesting additional work.

A suggestion would be to have a “Request for Additional Work” form, which would be completed by the client stating the additional work requested and the reasons. This should then be forwarded to the Manager responsible for the job. He or she should then complete a “Project Overrun” form. This form should include comments by the manager as to why say they believe extra testing should be undertaken. The form should then be sent to Senior Management and the decision to be taken as to whether this is reasonable, the extra number of days allocated and the cost to the client. Both forms should then be securely held and the decision passed to the client. Of course, the provider would undertake this extra work for the client but we would bill them for this work unless the original standard of work was unsatisfactory.

With respect to completion of timesheets and submission, I think that the Administrative Team within the provider should keep a copy of this and then forward the timesheet to the Manager or Director for approval. There is a risk with project overruns that the Audit Manager may not be pulling their weight and could allocate time to a job when in fact they have done nothing. This would also make their employees look bad and show that they have to muck in and control the project. This question arises when for example say a Manager tells their employees to send their timesheet to them so that they can make “adjustments” prior to submission to the administrative team. This always sounds dodgy. The Manager should not be able to override the controls on the timesheet system. This argument is only justified if the Manager is not the Managing Director.

There may be cases in budgetary control where figures on the budget reports do not agree to figures reported to the Board and this principle can be applied to timesheets.
As auditors, we always check the budget reports produced by the Finance Department to the Budget Report to the Board when we undertake a budgetary control audit so there should always be some sort of checking undertaken on timesheet reports. There is the risk that managers may try to hide their own problem by blaming staff under them; therefore auditors should always keep a copy of their timesheet.

Conclusion

Time management is very important, whether it is in exams, delivery of a project or just for life in general.

Contributed by Kastuv Ray 5/01/04
kastuv@kastuv.fsnet.co.uk