The Audit Team Manager: How Audit Leadership Drives Organizational Success

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Episode 141: Curious about what makes audit teams tick? Dive into the crucial yet often misunderstood world of audit team management where leadership goes far beyond checking boxes and finding faults.

Audit managers stand as guardians of financial integrity, straddling the strategic vision needed to align with business objectives while directing teams to investigate transactions that might reveal weaknesses in controls. These professionals aren't just looking to catch mistakes; they're building the foundation of trust upon which all stakeholder relationships depend. As I explore in this episode, "a company's financial reputation is the relevant social currency for doing business in the marketplace today."

The most effective audit leaders combine analytical prowess with exceptional communication skills, positioning themselves not as adversaries but as partners in organizational success. They understand that identifying issues internally before external parties discover them is a service to the organization. The audit team must be uncompromisingly ethical, as I note, "people pleasers make horrible auditors." Their findings, coupled with practical recommendations, drive improved processes, better governance, and ultimately, strategic advantage.

For finance professionals considering career development, time in audit roles offers unique perspective on how business functions interconnect, builds valuable problem-solving capabilities, and establishes you as a trusted advisor. Many successful finance leaders cut their teeth in audit before advancing to roles like finance director or risk manager. Ready to elevate your organization's audit function? Ensure your team has adequate resources, appropriate technology, necessary access, and leadership that values their findings.

What's the state of your audit function? Are you leveraging this critical team to their full potential? Subscribe now for next week's episode where I'll tackle risk assessment in the audit planning process.

Episode outline:

1. Key competencies of the audit team,
2. How the audit team manager contributes to the strategy and audit plan, and 
3. How a role in audit can help your career.

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For more resources, please visit Finance Leader Academy:  financeleaderacademy.com.

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Episode Transcript

Stephen McLain (00:04):
This week, I am talking about the role of the
audit team manager and how theylead the organization's audit
process. The stakes are too highin today's business environment
to let the auditing functionfail.
Our audit plans must test andverify that our processes are
done correctly and how theorganization's financial health

(00:27):
is presented. Anything less thanan accurate representation can
hinder an organization frompositive stakeholder
interaction. A company'sfinancial reputation is the
relevant social currency fordoing business in the
marketplace today, don't tarnishit. Please enjoy the episode.

(00:48):
Welcome to the finance leaderpodcast where leadership is
bigger than the numbers. I amyour host. Stephen McLain, this
is the podcast for developingleaders in finance and
accounting. Please considerfollowing me on Twitter,
Facebook, Instagram andLinkedIn. My usernames and the
links are in this episode's shownotes. You can also follow
finance leader Academy onLinkedIn. Thank you. This is

(01:11):
episode number 141, and I willbe talking about the role of the
audit team manager and the auditteam and I will highlight the
following topics, number one,key competencies of the audit
team. Number two, how the auditteam manager contributes to the
strategy and audit plan. Andthree, how a role in audit can
help your career banker andauthor, Hendrick van Lin Smith

(01:36):
Jr, said, I don't care how greatyour products or services are if
the company's finances aren'tmanaged well, it's doomed to
fail. I am continuing my auditseries this week with a review
of the audit team manager roleand what the audit team does
when you have to deal with anauditor reviewing your processes

(01:56):
and transactions. It can feelinvasive, sometimes scary and a
distraction, because you arevery busy. We're all very busy.
We all are and then you have toprovide access or answer
questions from someone whose jobis to find fault in your work.
That's how we often look at it.
The auditor is trying to get mein trouble and get me fired, or

(02:17):
point out what a horrible job Iam doing. The auditor has a
tremendous amount ofresponsibility to review
transactions for anything thatmay misstate an account or even
the entire financial statementsystem, and they are looking for
potential fraud. They are itcomes with a responsibility to

(02:37):
ensure company assets areprotected. Now, to be in the
right frame of mind, we need toremind ourselves that it's okay
for a second set of eyes toverify proper procedures were
followed and that we compliedwith GAAP and any other set of
accounting practices, along withhow we applied changes with
adjusted entries that may haveaffected the financial

(03:01):
statements. As a finance leader,I will always be ready for an
audit. I will teach and expect ahigh level of professional
ethics and a high level oftechnical expertise to properly
record transactions and toconduct an effective month end
close. That's my responsibilityas a leader. Now, did you listen

(03:21):
to last week to episode number140 the audit blueprint, CFOs
guide to financial integrity. Iopened this auditing series with
an overview of how the CFOshapes the audit plan to better
support the strategy theinternal audit plan ensures
better financial accuracy. Nowif you missed that episode,

(03:42):
please go back to listen whenyou get a chance. Thank you. To
be an effective audit teammanager, you must have the
ability to see the big picturewhile also directing your team
to find the details that mightshow a material weakness or a
root problem with internalcontrols, you have to work
jointly in the strategic sphereand also become very tactical in

(04:04):
the investigation and testing offinancial transactions, and if
established internal controlsare doing their job against
asset loss, the stakes are toohigh if the audit team fails to
do their job. Now, where doesyour organization rate on
governance? Accounting practicesare, in fact, organized and

(04:25):
standardized to create anenvironment for better
governance. Compliance means weare more transparent, we are
more accountable. We are doingthings within a standard and
ethical way of doing business.
This gives confidence to all ofour stakeholders, including
investors, governmentregulators, external auditors

(04:46):
and the general public,depending upon our industry,
good governance means moreopportunities for the business
to grow and to grow ethically,we all don't want another Enron.
I have said this before. Work.
We don't want to unethicallymanipulate markets. We want to
build a product or service thatmeets the needs of our customers
and that we compete however. Wecompete on price or quality or

(05:10):
some other acceptable andresponsible way. The auditing
team can help greatly in this.
Now, what makes a great auditor?
An auditor should have greatanalytical skills, industry
knowledge, be smart oncompliance standards and be
technically sound. And aboveall, should have above average
interpersonal skills andcommunication skills. An auditor

(05:32):
must be emotionally strong andprofessional at all times. The
auditor should always be thebeacon of ethics and integrity
with a lean towards a curiosityin the job at hand, internal
auditing will always be tornbetween doing the right thing
and saying what people want tohear your audit leaders must be

(05:52):
sharing expectations continuallytell the organization's Leaders
what you are finding and thendevelop recommendations to fix
it. People pleasers makehorrible auditors. Communication
is always key. When planning andconducting critical audits, it
is important to communicate theimportance of the audit being

(06:13):
conducted and how it aligns withthe bigger picture. Communicate
often with those who need toknow don't overlook problems.
Find the issues that canpotentially cause a misstatement
in the financials or a problemthat could lead to a loss in
assets due to fraud or waste, bevigilant and determined to help
steer their organization toproper accountability and proper

(06:36):
governance while working as anauditor, there are several types
of certifications you can earn,like certified internal auditor
and Certified Fraud Examiner.
The Institute of InternalAuditors offers several programs
like earning a certificate orgrowing various skills
applicable to auditing. Don'tever overlook education

(06:58):
opportunities to develop keyskills. And you can also earn
CPEs at the same time as financeleaders, we should be
continually be lifelong learnersin the pursuit of our career.
I'm a huge supporter ofcontinuous improvement, and just
getting better. ContinuousImprovement means we are always
looking for opportunities to doa better job, to be more

(07:20):
effective and more efficient.
This can often translate to costsavings in the long run, the
audit team can help performanalysis on how to better
improve processes. The auditteam is not just there to
perform traditional auditfunctions. Any available
capacity provides a chance tolook at other areas to improve.
Now let's talk about the role ofaudit team manager and the audit

(07:43):
team number one key competenciesof the audit team. The audit
team brings a unique set ofskills and capabilities to the
company, knowledge of auditstandards, communication skills,
interpersonal skills, problemsolving, the ability to perform
a detailed analysis and modelingand the ability to tie
governance to the long termstrategy they must understand

(08:04):
and operate in the strategicrealm of the company. So they
need to see the big picture andhow what they are doing ties
back to strategy execution. Whatthey are verifying should align
with the business's objectives,even though we expect our audit
team to be technical experts onauditing procedures, I also
expect auditors to exercisegreat leadership so the audit

(08:26):
process goes smoothly andefficiently. Put the team at
ease when digging into theirprocedures, and the audit team's
findings should come with a setof recommendations. Be prepared
for pushback, especially whenyou find anomalies, be prepared
to highlight the source of theanomalies and communicate that
it is always good for theinternal audit team to find and

(08:49):
address issues before anyoneexternally does, be proactive
and bring real solutions. Numbertwo, how the audit team manager
contributes to the strategy andaudit plan. Now, every process
in the business must support theoverall strategy, including the
audit plan. Planning andeffective audit strategy begins

(09:09):
with aligning with theobjectives of the business. The
audit team must understand theindustry and the service and
product portfolio that is beingoffered. I mentioned earlier
that the internal auditing teamis critical to helping the
organization with financialaccuracy, good governance and
the protection of companyassets. The auditing team must

(09:30):
be leveraged to find whether thebooks or business practices are
wrong. I believe that theauditing team must conduct
general auditing and specializedauditing throughout the year to
verify the financial positionand overall health our strategic
leaders need to feel confidentthat the financial health of the
organization is correct, thatwhen they lead and speak, that

(09:52):
the information they have isaccurate, financial information
that is incorrect leads. Wrongdecisions, eventually it leads
to crisis, if not found early. Iwill talk about risk management
in an upcoming episode, but theaudit manager operates within
the risk model of theorganization. Financial Risk is
real and must be tested in theaudit plan. Develop the plan for

(10:16):
each audit by defining the scopeand processes, deciding on the
methods that will be used, theproper allocation of resources,
team assignments andresponsibilities, and developing
a field work calendar. The auditteam leadership works closely
with the CFO and other seniorleaders on the audit planning
calendar, any criticalrequirements in when and how

(10:38):
findings will be reported, theauditing team leadership must
practice strong professionalethics. Always do the right
thing, check on the protocol forwhen there is a lack of
cooperation or other oddoccurrences, the company board,
business ownership or requiredgoverning body should be the
only entities that can alter aninternal auditor. Once an audit

(11:01):
plan is established and is beingconducted, expect external
auditors to document and reportany discrepancies with access or
a lack of cooperation, which cangreatly affect stakeholder
actions down the road. Numberthree, how a role in audit can
help your career. Auditing helpsyou see the books and financial

(11:23):
statements from a differentperspective, and that helps us
to see the business as a wholedifferent a different
perspective. Helps us tounderstand how various teams and
functions of the business gotogether to support and achieve
a common goal. You will betterunderstand business processes
beyond accounting. Additionally,you will become a problem solver

(11:45):
due to the complexity ofverifying transactions and
proper processes, yourinvestigation skills will
continue to grow. This willresult in you becoming a trusted
advisor as you bring results andfix issues, this will translate
to more accurate financialstatements and better
governance, which then resultsin more investments. You will

(12:07):
see your reputation continue topositively grow. A caution to
consider, though, errors in thetransactions are not always
fraud. They could be honestmistakes, which means there is a
need for additional training.
This should be in your findings.
I have found many times whentraining was needed and better
processes now regarding yourcareer advancement, follow on

(12:30):
assignments can include financedirector, Risk Manager or
internal audit director, andmany others down the line. Now,
I enjoyed my own auditingexperience. I spent a lot of
effort talking with people aboutthe importance of strong
internal controls and why itmattered that our assets that
must be safeguarded. It wasstrategically important to teach

(12:52):
and explain that we should allbe working toward a business
environment where we all becamemore efficient so our cash
available was maximized in orderto ensure our common goals could
be more easily achieved. Now foraction today. Now let's talk
about the audit team for a fewminutes. How well resourced is

(13:12):
your audit team? Do they havethe correct FTEs depending on
the size and industry of theorganization. Do they have the
correct IT systems to managetheir auditing responsibilities?
Do they have access to records,to people and to leadership? Is
there a formal process to planand to schedule the right
internal audits throughout theyear, and do they have the time

(13:34):
to complete everything and topresent findings if you are a
senior leader, does the auditteam have access to you to
address ongoing concerns, andare you willing to listen? Do
you have the right leadership inplace on the audit team? Today,
I talked about the role of theaudit team manager and the audit
team and I highlighted thefollowing points. Number one,

(13:57):
key competencies of the auditteam. Number two, how the audit
team manager contributes to thestrategy and audit plan. And
three, how a role in audit canhelp your career. Don't overlook
a role or even an entire careerin audit, if you like, to solve
problems, work with details andhelp to promote ethics in our
profession. Audit may be a greatplace for you. There are several

(14:20):
certification opportunities, anddepending upon if you work on
the private side or in publicaccounting, it will help
determine which one to earn.
Next episode, I'll be talkingabout assessing and measuring
risk as it pertains to the auditplanning process. I hope you
enjoyed the finance leaderpodcast. You can find this

(14:40):
episode wherever you listen topodcasts. If this episode helps
you today, please share with acolleague until next time, you
can check out more resources atfinance leaderacademy.com, and
sign up for my weekly updates soyou don't miss an episode of the
podcast and now go lead yourteam and I'll see you next time.
Thank you. You.