Alan Anderson

Alan Anderson: Applying JIT Concepts to the Audit Process

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Reduce audit time by 20% without reducing quality.

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By Alan Anderson, CPA
Transforming Audit for the Future

For most audit firms, the concept of “just in time” means that the audit was completed and the financials were delivered “just in time” to meet the deadline. But in this webinar, Alan Anderson explains how concepts from just-in-time manufacturing can be applied to make audits more efficient, reducing time by at least 15-20% while also improving quality and customer service. 

 

MORE ALAN ANDERSON: Are You Using the Right Business Model? | Give Advice While Remaining Independent | The New Formula for an Accounting Business | Don’t Risk Losing Good Employees for Bad Clients | Four Questions to Make Your Firm More Successful as a Business | Say Adios to Audit Fee Pressure | Deliver More Audit Value by Getting Out of the Conference Room | Six Essential Elements in Audit Planning | Before the Audit: More Than Just Planning | Five Crucial Attributes for Successful Audit Leadership | Put the Ethics Code to Work for Your Clients and Your Firm | Is Audit in Crisis Because of Definitions?
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Just-in-time manufacturing was devised to reduce inventory costs, downtime, and waste by following four sequential steps for every manufacturing process: design, build, inspect, and delivery. By analogy, the four steps of JIT manufacturing correspond to the four audit phases of planning, fieldwork, review, and delivery. The raw materials of an audit consist of the trial balance and schedules supplied by the client, and the final deliverable is the audit report.  

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“Insights, data and actionable intelligence for hundreds of thousands of accountants around the world… A major platform for thought leaders to share bold insights, innovative ideas and audacious challenges to the status quo.“

Give Your Audit Teams Tasks That Increase Business Acumen

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Business-mindedness helps you identify risks.

By Alan Anderson, CPA
Transforming Audit for the Future

I’ve previously described a task I have teams perform at the end of an audit. After everyone shares their insights about what they learned about that client and their operations, I ask everyone to complete this phrase:

“If I were running this business, I would ______________.”

 

MORE: Are You Using the Right Business Model? | Give Advice While Remaining Independent | The New Formula for an Accounting Business | Don’t Risk Losing Good Employees for Bad Clients | Four Questions to Make Your Firm More Successful as a Business | Say Adios to Audit Fee Pressure | Deliver More Audit Value by Getting Out of the Conference Room | Six Essential Elements in Audit Planning | Before the Audit: More Than Just Planning | Five Crucial Attributes for Successful Audit Leadership | Put the Ethics Code to Work for Your Clients and Your Firm | Is Audit in Crisis Because of Definitions?
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

 

Here are a few of the ideas I’ve heard audit teams come up with in that exercise:

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Are You Using the Right Business Model?

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Own your expertise and price it accordingly – yes, even in audits. 

By Alan Anderson, CPA
Transforming Audit for the Future

Those firms that value the chargeable hour above all risk losing their best team members. The ones who want to think, innovate and come up with creative ideas that add value to the client and the firm will leave.

MORE: Give Advice While Remaining Independent |  Stop Mixing Up Your V’s and Losing Your Best People | How to Upgrade C and D Clients | Can a Service Center Model Solve Audit Staffing Shortages? | Move to Advisory and Assurance with Relevance | Use Eight Audit Exit Items to Deepen Client Relationships | Know Your Three Audit W’s | Planning Lays the Foundation of Audit Relevance | Are You Correctly Identifying the Relevance Intersection?
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When audits are billed out on a flat-fee basis, is an hourly rate still relevant? Tracking time isn’t a revenue system if it does not impact what the client pays you. The billable hour is nothing more than a cost accounting system. Production is what the client pays for, so measuring that, plus instituting measures for accountability, more closely mirrors what brings money in the door.

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Give Advice While Remaining Independent

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Find the magic 20 percent that could create clients for life.

By Alan Anderson, CPA
Transforming Audit for the Future

The pillars of our ethics are objectivity and integrity, and our profession has chosen independence to measure our objectivity as CPAs. We can still offer advice and insight to our clients and remain objective. We cannot, however, act in the capacity of management. Our clients must decide which ideas to use and implement them.

MORE: Stop Mixing Up Your V’s and Losing Your Best People | Empower Your Team by Dumping C and D Clients | Eleven Types of Audit Clients and Which to Fire | Don’t Take on Audits in an Industry You Don’t Understand | How ‘Business Expert CPAs’ Get Their Own Business Wrong | Exceptional Audit Client Service Demands Effective Communication | Five Ways to Prevent Audit Bottlenecks | How Do We Drive Relevance in Audit? | Lack of Relevance Drives Audit Commoditization | Four Basic Understandings Every Auditor Must Master
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

 

The tricky part comes when something we recommend fails. For example, let’s say a client asks for software advice, and they choose one of the three options we suggest. But that package isn’t working. Now, can we be objective enough to admit that the advice we gave them and they paid for was wrong? Do we have the integrity to tell the client they must write off the cost of that capitalized software? Can we be objective enough to face the possible negative consequences and not just protect ourselves?

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