Applying Agile to your Annual Planning process.

With the impact of COVID, and more generally, a change in the way we work, a traditional approach to annual planning may not be possible. Audit teams which are stretched as a result of the havoc created by the pandemic and the need for businesses to react swiftly, may be short on time for their annual planning.

Annual planning is a critical activity which must be performed each year. Not only does it set the agenda of audit activity for the year to come, but it also ensures we develop a risk based plan; a key requirement of the auditing standards. Therefore, it’s important that we do Annual Planning correctly.

We have already provided an overview / guide to Annual Planning which you can read here. In this blog post however, we’re going to discuss two concepts; Agile Annual Planning, and an Agile Plan.

Agile Annual Planning

What is ‘Agile Annual Planning’?

Put simply, this is applying Agile techniques and an Agile way of working to our Annual Planning process. The planning process will be performed using a collection of Squads and a series of sprints to complete the process in a much shorter timeframe.

What does an Agile Planning Process look like?

This approach works best for larger entities who have bigger audit teams, with high performing audit team members who want to push themselves or learn more.

Firstly, the team will be broken into smaller groups. Each smaller team (or Squad) would be lead by a Manager and would be responsible for a specific activity in the planning process. Activities which need to be completed are similar to any annual planning process, but can include:

• Meetings with Executive team members;
• Meetings with risk partners;
• Review of external information and hot topics, such as these;
• Updating and review of the Audit Universe; and
• Preparation of the audit committee deck.

Each team can perform their tasks concurrently, with weekly (or even daily) meetings / sync to share the status and progress each team has made.

Above each Squad should be a Leader who is responsible for ensuring the overall coordination of the annual planning process and ensure each team is working in the right direction.

Each Squad is responsible for setting their own tasks and ensuring the timely and effective delivery of their objective. For instance, the Squad responsible for meeting with Executive team members will be responsible for organising the meetings, developing the meeting agenda, and consolidating meeting minutes within the specified timeframes and providing regular updates as part of the weekly or daily meetings / sync.

The aim of this approach is to have as many people (as practically possible) working on individual components of the planning process at the same time, completing what would traditionally take a team of two people one month to complete, only a couple of weeks to complete under an agile approach.

What are the benefits of this process?

There are many benefits to an agile approach. These include:

• Opportunity for more junior, high performing team members to take a step up and take onboard more responsibilities.
• Planning process is completed in a much shorter timeframe, freeing up team members to go back to completing audits more quickly.
• Can allow for more meetings and more research, allowing for the development of a more detailed and risk based annual plan.
• Reduces the amount of time required from the Head of Audit, allowing them to focus on discussions with the audit committee, higher level exec team members, and other critical audit priorities.
• Holds team members accountable to specific tasks in the planning process.
• Allows more junior team members to gain exposure across the business.
• Educates more junior team members on the annual planning process.
• Allows team members to be moved to support Squads which are running behind schedule.

The benefits are ultimately reaslised when the annual plan is completed with sufficient time before the audit committee, and both management and the audit committee are satisfied with the proposed plan.

What are the cons of this process?

Whilst there are benefits, there are also some downsides to the annual planning approach. The cons can be easily mitigated through appropriate planning and sufficient oversight and decision making from the project coordinator. Disadvantages to the agile approach include:

• The business will need to be made aware of the new agile planning approach.
• Training and upfront investment in team members to ensure they are aware ad understand the agile approach.
• The quick pace of the planning process and shortened timeframe may see some business areas being slow to react or provide input, potentially holding up the planning process.

An Agile Annual Plan

What is an ‘Agile Annual Plan’?

At present, many audit teams prepare an annual audit plan for the upcoming 12 months. The plan remains largely rigid with a mid year review and minor updates, if any. An Agile Annual Plan will only provide a quarterly view (as opposed to an annual view). The plan will be updated and communicated to the audit committee to show proposed audits for the upcoming quarter.

What does an Agile Annual Plan look like?

On face value, an Agile Annual Plan will look the exact same as your traditional annual plan. The only difference will be an Agile Plan will look much smaller, as it will only show a quarterly view. As the year progresses, the plan will grown with a complete annual view being presented by Q4 of the year.

What are the benefits of this process?

There are a huge number of benefits with the approach, particularly for those who have been massively impacted by COVID and do not have the resources available to plan for the entire year. Benefits of an Agile Annual Plan include:

• Focus on immediate risks which need audit oversight and review.
• Adapt to the needs and business more quickly than the traditional approach.
• Sets realistic and achievable audit plans.
• Allows for long term audits to be incorporated in the plan, with more frequent reporting and updates as opposed to the traditional approach where one report is typically provided at the end of the review.
• Allows for audit resources to be moved and utilised more effectively and efficiently.
• Helps apply the new Three Lines Model more effectively.

What are the cons of this process?

The biggest hurdle to an agile plan is gaining the support of ‘traditionalist’. The concept of an Agile Annual Plan may not bode well with more traditional, and ‘stable’ auditors, and in particular, audit committee members and executive management. A significant amount of time may be required to firstly educate and demonstrate to audit committee team members and executive management the concept of an Agile Annual Plan and the benefits which it can bring the business.

Overall, the templates which we have built and prepared can still be applied to the annual plan process. To purchase out suit of annual planning templates, please click here.