Management Performing Walkthroughs---Define _and_quot;Management 1224



  • Hello all,
    For 2006, the plan at our company is for management to perform their own walkthroughs. Our external auditors have been fine with this, but today asked who exactly will be performing the walkthroughs. External auditor said that it should be a manager independent of the process.
    We were thinking that managers would walk through their own processes. Has anyone heard this before? Who is performing walkthroughs at your companies?
    Thanks.



  • Generally, a management ‘walk through’ should be performed by someone other than the process owner (or their supervisor), although the process owner should sign off on their process narratives first.
    The purpose of the ‘walk through’ is to ensure that the process is documented well enough for someone who is not familiar with the specific steps to walk a transaction through the process by reading the narrative (and flowchart).
    It’s just an independence issue.
    You wouldn’t necesarily want a Controller or CFO to take the time to walk through every process, due to time constraints, but a manager at a comparable level to the process owner is fine. For example, having the Accounts Receivable Manager walk trough the Expenditure Cycle’s (Accounts Payable Manager’s) processes, and vice versa.
    Very often, an internal audit supervisor/manager (or consultant) who did not prepare the process documentation will perform the walk through in the normal course of properly supervising the audit work.



  • I might be repeating some of the ideas posted above by John, but I just wanted to re-emphasize that managers performing walkthroughs of their own processes is considered the weakest option.
    They own the process, they understand it really well, they used to having the controls they have. Therefore, they may not see any deficiencies that an independent person could notice. The attitude is simply as follows: ‘We’ve been doing it this way for many years and it worked fine. Therefore, the process is fine.’
    It is in your best interest to have someone ‘independent’ to walk through the process. This would give you a ‘fresh eye’ that can point out any deficiencies/inefficiencies to the Business Process Owner (or manager). It would also allow your external auditors to place some reliance on this walkthrough (normally they would not place reliance on walkthroughs of processes performed by the process owner).
    Some of your options are:

    • Peer testing (e.g. Purchasing Manager doing a walkthrough of Revenue and Receivables cycle). The downside is the fact that the Purchasing Manager may be totally unfamiliar with the cycle. Alternatively, if you have more than one branch/division, you can have a Purchasing Manager from ANOTHER branch to perform a walkthrough of Purchases and Payables at your branch and vice versa.
    • Internal audit. Good, as they are supposed to be competent with all major business processes. Bad if you don’t have internal audit or if the IA department is small.
    • Independent contractor (e.g. a CPA with experience in Internal Controls). Good, but expensive.


  • External auditor said that it should be a manager independent of the process.
    We were thinking that managers would walk through their own processes. Has anyone heard this before? Who is performing walkthroughs at your companies?

    It is not for the auditor to define who should perform your walkthroughs and if they are being this explicit then I think they are out of order.
    Management is required to have a process for arriving at it’s own evaluation of internal control and can define this however it so wishes. The auditor can, of course, form an opinion that the process is indequate. However they quite clearly cannot tell you what to do.
    Personally, I have no problem with managers walking through their own process. Walkthroughs are not the only piece of evaluation work that a company does and one has to consider the totality of the process. There are pros an dcons either way and this is what the company has to balance in order to form the process.


Log in to reply