Internal Audit Automation Set for Takeoff?

In February 2006, he met Bill Hagerman, executive director of internal audit at Mindspeed Technologies, a publicly held semiconductor and networking solutions provider. Shah, as it turned out, was working in the very direction Hagerman wanted to go.

After going through Mindspeed's first year of Sarbanes-Oxley compliance in 2005, Hagerman had told his boss that a fully automated audit solution would be far preferable to the more manual documentation and testing processes he had used. He got approval to purchase software for the task, and started looking into what was available.

"I made the decision right off the bat that I wasn't going to buy five applications to do everything I needed — but there was nothing out there that consolidated everything," he said. "Then I ran into Dipak through a mutual acquaintance, and he shared the same vision I had."

Mindspeed became the beta client for the development of ReliantAuditor, a process that took more than two years. "Any time you start up with a beta, it's a risk, because you're sinking capital into it and you don't know if it's going to come to fruition," Hagerman said. "But I believed in Dipak's plan. We started on version 0.93 and when we went to 1.0, I knew we had a viable tool. Now we're on 2.5, and it is a kick-ass tool."

First of all, there is the convenience of having all the audit data in a single tool. "I like having all my information at my fingertips, where I can just point and click," Hagerman said. "I don't want to have to go in and out of applications to get the data I need."

More important, costs are being stripped out. It's less expensive to buy one application than five, of course, but the cleaner data being generated through ReliantAuditor has reduced Mindspeed's external audit costs by 25 percent. Hagerman said he told his Deloitte auditor, only half-jokingly, "Now that you have access to this tool, next year I don't even want you on-site. Don't bother to come in until year-end."

Internal audit costs are falling as well, because now that the software is enterprise-wide, Hagerman is doing a lot less traveling to the company's international locations. "This application makes my life easy, because I have visibility into all transactions that are posted by these locations," Hagerman said.

Hagerman has in mind a further level of efficiency for next year. Right now, he receives alerts that ReliantAuditor generates any time it identifies an exception to a business-process rule that the software is monitoring. He then must pull information necessary to perform an audit on the exception, or request someone in the field office where the exception occurred to locate the information. Next year, he plans to have the alerts directed to whoever input the data in the first place — "the people I'd have to talk with anyway."

"That will give me more time to do audit work. Right now I spend a ton of time gathering documentation for audit purposes," he said.

Career Booster?
In fact, Hagerman thinks championing a cutting-edge tool like ReliantAuditor will have a direct impact on his career prospects. "We're looking at the future of internal audit with this product," he said.

IDC's Wilhide, too, addressed the potential for career enhancement. "By automating audit through Reliant's holistic approach, [chief audit executives] can elevate their focus on strategic rather than tactical issues that can positively impact operational performance," she wrote in her report. That dovetails nicely with the reality that, as she put it, "the role of internal audit is evolving within many organizations as a key stakeholder in governance, risk, and compliance strategies."

For his part, Reliant's Shah said of continuous monitoring and auditing generally, "What we're seeing in the audit profession right now is that those who have incorporated continuous monitoring and auditing are handsomely moving up in the value chain."

Looking Ahead
ReliantAuditor lies on top of a customer's enterprise resource planning system. It's been designed specifically for the SAP, Oracle, and Great Plains ERPs, but Reliant says it can be adapted to any system.

Wilhide's report further detailed the product's functionality. She wrote that it effectively brings together two subcategories of GRC applications that have evolved over the past several years: compliance and risk management solutions, including audit plan management, control testing and assessment, and remediation management; and business assurance analytic applications, including continuous controls monitoring and evidence management.

According to Shah, at least four new ReliantAuditor installations are likely to be implemented by year-end. Some very large companies are interested, he said, but because Reliant is a small firm, for now it may have to narrow the product's scope to a particular division or ERP system. The holy grail for Shah is partnering with one or more major public accounting firms, which he hopes to do if he gets 10 or 20 customers under his belt.

ReliantAuditor has two pricing models: a subscription fee based on the number of concurrent users of the system, starting at about $75,000 a year with maintenance included; and an enterprise license fee that starts at $500,000 plus 18 percent annual maintenance for any number of users.

Shah unabashedly calls his system the wave of the future in internal audit automation. "It's going to take about five years, but Corporate America will be doing audit the way we are suggesting," he said.

• « previous
• 1
• 2
• 3
• next »