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The Audit Podcast
Ep 274: Managing the Hell Out of Your Audit w/ William Englehaupt (Auditology)
00:28:50
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- [00:00]
Bill Engelhop
Most audits follow the same steps. They have a prescribed task list that's in front of them that comes out of their audit programs or their audit plans. And what we find though is that there's a huge amount of variation in how teams interpret what's there and how they actually execute the audit on a day to day basis.
- [00:22]
Trent Russell
Hello everybody and welcome to another episode of the Audit Podcast. I'm your host Trent Russell. Today on the show we have Bill Engelhop. Bill is a former director at KPMG and PwC. He is now the CEO and founder at Auditology LLC. We're going to get into what all Bill's doing for everyone and the clients he's working with, some of the stories that he shared, some of his war stories from previous engagements and clients he's worked with. Also the other super interesting thing about Bill is he was the former president from January 2023 to May 2025 of the Southern Barbecue Network, which I just thought was super interesting. I've this kind of like bucket list item of judging a barbecue contest just to be able to eat good barbecue. So spent a few minutes talking about that out that also just because I thought it was super interesting. So some of the other things that we hit on a little more on the audit side is there was a quote on his website, Bill's website, that said a brilliant new audit method to discover insights into the process flow, root causes of issues and non standard operation steps of any process. And so I wanted to know what those new methods were. So we go into a little bit of detail there, like I said earlier, some client success stories where he's helped and how he's been able to help. Trying to get a little bit out of Phil so that everybody can learn from him on that front. He also had this other quote. So I got a very quotable website apparently saying it's a straightforward no BS system for managing audits with discipline, urgency and control without relying on theory or hoping the things magically come together. Discipline and focus are two of the things that I try to live by pretty consistently and I am forcing my 7 year old to do Also for now it's just him knowing what they mean. Nothing too nutty or crazy there. But I wanted to understand where that discipline comes into the process and what he means by that. The other reason that we had Bill on though was because to talk about his book. And so the title is Managing the hell out of your audit, Taking control of your audit. A real world guide for getting stuff done earlier and staying on plan. So it's on Amazon and I'm sure everywhere else. So if you just search for managing the hell out of your audit, you shouldn't have any issues. Issues finding that. So basically, want to kind of do an 8020 with Bill on that. What's the, you know, one or two things that we can take away from that or maybe the one thing that we can take away from the book. What would that be? So Bill shares that also. I think a lot of teams are doing this. I know a lot that we work with do this, and I think it is very effective. So would highly recommend sticking around for that. Okay, with that said, here we go. Tell me the barbecue thing again.
- [02:53]
Bill Engelhop
Yeah, so it's one of those things down here in South Carolina, where I live, you want to, in essence, one in Rome, so to speak. So I got involved in the barbecue culture. I went through a lot of different training programs and became a certified barbecue judge and was involved in judging competitive barbecue, which is a whole nother weird world unto itself, and actually became involved in a group called the Southern Barbecue Network. And up until July, I was the president of that group, which is a group that helps manage and judge barbecue competitions along the southeast corridor here. What's the.
- [03:32]
Trent Russell
What do you have to do to get qualified to be a certified barbecue judge?
- [03:36]
Bill Engelhop
Well, you got it. You gotta like, eatin. But they, they train you, right? So there's, there's, there's various criteria that you look for when you look for barbecue. It's the flavors, the tenderness, it's the texture, how it looks, that kind of thing. And so what you're really tr Training is kind of getting you to the point where you understand where the line is and what's good, great, excellent kind of thing. And you just taste lots and lots and lots of barbecue. I mean, it's not uncommon that at a barbecue they'll have three different kinds of meats. Sometimes they're four different kind of meats. So you'll have pulled pork ribs, you might have beef, you might have chicken. And so as a judge, you are sampling, and hopefully you want just little bites. But you're sampling a lot of food and it doesn't take many repetitions. After a while, you get the hang of that.
- [04:23]
Trent Russell
It sounds like one of those things where it sounds awesome. And then at the end of it, I gotta imagine you're looking down, you got, hey, we got three more of these to go. And you're just like, already.
- [04:35]
Bill Engelhop
You gotta like the barbecue. But the other good thing too is that you're eating really good barbecue. And that, and that's really the tough thing is like when you're separating and you're almost splitting hairs between was that piece a 9, 9 and 1 was a 9, 8 or something out of a 10 scale. And, and so you're, yeah, you're, you're, you really got to focus in on that. But it's, it's a fun thing. And, and I don't do it as much as I used to because I, once I stepped down from management, so to speak, I kind of dialed that back a little bit. But I still enjoy good barbecue. And, and down here, you, you, you can't swing a dead cat without hitting a barbecue place.
- [05:14]
Trent Russell
All right, I got one more barbecue question. The. I've always heard that competition barbecue is different than if you got that in a restaurant. Is that, what does that even mean? Why would you make it differently?
- [05:27]
Bill Engelhop
Yeah, so what they have is a. Different associations have different standards of what good is. And so the people that do it really well cook the barbecue to that particular standard. And it is highly, highly bespoke, highly managed, highly decorated, the boxes are elegant, that kind of thing where they, they presented in. And most restaurants could not afford to put that level of care into the barbecue that they serve on a regular basis. For example, in competition, you're often going to get wagyu beef as barbecue, which you know, for some people is saying, huh? But that's, you know, somebody is throwing 100 plus dollar piece of meat on the, on the smoker. You would never, you would rarely see that in a restaurant or if you would, you probably couldn't afford it because it would be quite pricey. So it's those kinds of. And again, I think it's just the manual intensive nature of competition barbecue just makes it really kind of cost prohibitive.
- [06:30]
Trent Russell
Okay, I saw the barbecue thing on your LinkedIn and absolutely wanted to ask you about that. So. All right, now we'll get into the actual like audit and all that kind of good stuff conversation. Hey everybody, we're going to take a quick break from our guests. And if you need to get analytics or AI actually working in your internal.
- [06:44]
Bill Engelhop
Audit department, or if you already have.
- [06:45]
Trent Russell
Some of it, you feel like you're not really getting exactly what you need out of it. You know, there's more you're not getting that. Go to the Show Notes, look for the Green Skies analytics link. Click it on the website. There'll be other links that you can click that'll take you directly to a calendar to Schedule time. It's literally three clicks to get the time scheduled to get it figured out. All right, back to the show. Do you have a favorite prompt that you've been using in any kind of AI tool? Maybe something or use case either Professionally, the personal stuff is, I gotta be honest, way more interesting than the professional stuff at this point.
- [07:21]
Bill Engelhop
Yeah, no, it's interesting because I volunteer with a group called score, which is a national organization that mentors small businesses. And as part of that role, we get a lot of people that come through that are kind of clueless. I don't mean that in a bad way, but they're trying to get started and they don't really know where or how to get going. And so what I did is I created a prompt, it's called the Professor. And the professor is an expert in helping diagnose and generate ideas and suggestions about how to start in a small business. And we gave the professor a nice behavioral profile. So he's friendly, he's not condescending, he's really understanding, asks a lot of questions. And then we also edit some, what I would call guardrails to make sure that our professor doesn't go off and give legal advice, accounting advice, tax advice that they shouldn't be doing ever. And so oftentimes when people get stuck in these interviews with new businesses, I'll open up the prompt and let the prompt basically interview and generate ideas. And then you get the output from that, which is really nice and it can go on. I mean, I've had some of these that up to an hour and generate almost a plan that you can then send the individual and they will have a good starting point for it. So I've had a lot of fun with it and it's worked really well and it's really helped people sometimes find it easier almost to talk to a computer than humans. And the way the thing is set up, it's pretty friendly and it really helps get the, the problem and issues out for them so that they can get proceed with that. So I've had a lot of fun with that. I'd be happy to send it to you if you're interested.
- [09:20]
Trent Russell
Yeah, absolutely. If there's a way we can link out to it, we'll be sure to do that. So yeah, please send the link and we'll try to get that out to the listeners. Definitely those mentoring or coaching GPTs or chatbots work really well. I think it's one of the better use cases in internal audit to have that like internal audit mentor, especially Like AI as an AI tool. If you have rotational auditors, people coming from the business who are like, I barely know what you guys do and you go here, ask this thing, the questions for now.
- [09:52]
Bill Engelhop
Well, and they can, you know, quiz you, which is really kind of cool. They can generate test questions and things and they can test understanding. So yeah, there's all sorts of applications for that. So I like it a lot. I use some other prompts in some other areas, but this is the one that I particularly with my volunteer work, use a lot. So thought I would toss that one out for you.
- [10:15]
Trent Russell
So I know I looked at your website and one of the quotes from there says, brilliant new audit method to discover insights into the process flow, root causes of issues and non standard operation steps of any process. And so I wanted to ask you what are the new brilliant audit methods that you're speaking about?
- [10:34]
Bill Engelhop
And, and I have to. You never know what your readers will do. That's an Amazon review from someone that read the book. So I was, I was really excited to see that. It was quite a great review. So I appreciate the person that did that. And when we talk about, I mean, brilliant is, is maybe an extreme level of it, but I like to think they're very unique and very different. And the idea around these techniques are bringing the world of lean and lean six sigma and applying them to service processes that are inside an audit function, be it internal audit or external audit. And what we found when we got into this a number of years ago is that was a relatively unique application of the theory and the methodology. There have been improvement efforts kind of half over here, half over there, but applying a discipline around that and then being able to really micro focus it on how people run audits, I think to me is probably the brilliant or unique factor that the reader there is talking about.
- [11:40]
Trent Russell
Yeah, I like how you can take things that are not maybe derived or born from the audit world, like agile or something like that, and then go, oh, let's pull pieces and see how we can make what we do better. And it sounds like this is one of those cases. Is there to kind of maybe cement it into people's brains a little bit more? Is there like client success stories? You can tell any story. Let's just call this. Sure, I'm sure. Corner story time. There we go.
- [12:09]
Bill Engelhop
Right. And we'll go curl up with our books and, and sit quietly on our blankets. Right. So I look at a couple of things. One is, I think the first real big success story was when we started at PwC. And the audit practice there really, I think, kind of went out a little bit on the edge because they brought a bunch of people such as myself that basically were on the consulting side. Our clients were factories, industrial manufacturing plants kind of thing. And they had the bright idea that saying, you know, you guys have been doing that there. What do you think if you came in here and did it here? And so, you know, kudos to them for kind of seeing those connections very early. And as we got into it more and more and more, it's like there was a factory there, except it's a white collar factory. But the audit processes are very similar. They're common across multiple audit practices. We saw them in internal audit functions, finance departments, tax departments, you name it. And so the first real big success story was the audit leadership believing in it and then seeing those results for the practice. And then the big multiplier then was to say, okay, because you're in a large public auditing company, you can then take these gains and multiply them across hundreds of teams. And so for us, and being able to replicate the model over and over and over again, and seeing gains in productivity, seeing reductions in hours, turnover, those kinds of things have significant impacts for the teams that we work with. So that was one. And then the second one I think about is that we were at KPMG and we had a proof of concept at KPMG where we were brought into a relatively large audit. We're in the tens of thousands of hours side 40, 50 people in the on the audit team. And the audit partner was quite skeptical. It's like, I think my audit's doing really well. And you guys really got to show me what you got here, because if you don't, we'll figure out something else to do with it. And at the end of the day, we did. We got him some pretty significant gains in that. And this audit partner went on to become the champion for our work in the firm and really drove the adoption of that across the entire auditing practice. So I think of those as really two big milestones and successes, because had we not had those successes, I might be out doing drywall or something right now. Who knows?
- [14:53]
Trent Russell
I've been vasilitis.
- [14:54]
Bill Engelhop
So one example that comes to mind too, that again, more tactical down to the actual team level, was working with a group of internal auditors, and they were charged with working directly with the public auditing side, the outside auditors. But they were struggling to keep up with the demands and the work that were being dumped on them as a Lot of audit functions now are realizing the work by others is really growing as companies try to economize and cut down the number of dollars they spend on external auditing. And so they were really struggling. And so one of the key areas that they had to support were walkthroughs. And there were certain number of walkthroughs that they had their own accountability for. And then there were others that they had to jointly support with the auditors. And the biggest problem for them was meeting the deadlines, they were dragging out the reviews. The follow follow ups after that were quite lengthy. And as a result, they were constantly being harangued by the auditors, the external auditors for where's the work? Need the work, we need the work. Where is it? And so in a focus session with this internal audit group, we worked out a standard protocol for how they could execute audits in about seven work days. And the walkthroughs go from the beginning all the way out through the various people that had to sign off on that and handing it off to the auditors. And that had a real significant impact on it. They realized how much extra work was going into this and how much delays were slowing the process down. So that was a big win for this group. And it was also the very similar protocols that we put in place for our external auditors. We teach them the same kind of methodology and again, we get the same kind of results. It's like shrink that stuff down. Because there's nothing worse for an auditor than to have done work in say, June or July and not have it done in December and then suddenly realize, oh, we need more work. And that annoys the auditors, it annoys the clients, and it creates all sorts of problems for them. So that was just one really short example of how we applied a protocol and had a real impact on how that internal audit group helps support their external audit partners.
- [17:23]
Trent Russell
Okay, yeah, I think we can. All that have been on the stock side can empathize with that one. So I'm sure the folks that you helped are greatly appreciative of that one. There is another quote from the website. It says it's a straightforward no BS system for managing audits with discipline, urgency and control without relying on theory or hoping things magically come together. Maybe too much information here. I don't have tattoos, but I've thought if I were to get a tattoo, it'd be something with the associated to the word discipline. I'm a huge fan of everything that goes with that. So where does discipline apply, need to be applied in this process?
- [18:02]
Bill Engelhop
Yeah, and one of the things that we think about is that there is, if you think about the audit, generally speaking, it's what you would call standard work. Most audits follow the same steps. They have a prescribed task list that's in front of them that comes out of their audit programs or their audit plans. And what we find though is that there's a huge amount of variation in how teams interpret what's there and how they actually execute the audit on a day to day basis. And so for us, the discipline that we would see is saying, how do you execute this audit in a standard way that you can then replicate it week after week after week and then replicate it one team to the next team to the next team. And there's discipline around things like planning, there's discipline around how they manage various and sundry internal processes, like review notes, for example, is a huge area that there's so much variation in and creates huge amounts of problem form. But applying some discipline around that tightens that process up, has a huge impact on the amount of ability that the audit team has to get work done. So discipline around those kinds of things. But the big thing that we talk about really is discipline around the planning and then building in those prototypes, protocols, or the standard work that they would follow on a day to day basis to get their work done.
- [19:27]
Trent Russell
Okay, I like that. I could definitely see that the, just even the idea of having to follow a process and depending on how tight it is, can be a struggle on the discipline side of things to go like, I gotta do this exact same thing like this again, I'd rather just kind of do it my way, this way. So I appreciate that answer and understand.
- [19:52]
Bill Engelhop
I'm sorry. Yeah, I was just going to add too. A lot of that is also a function of how the audit function is trained. And if you think about it as kind of the apprenticeship model in action, and people learn from the people above them and they may be learning inefficient or ineffective methods, but then they learn it and they use it and replicate it, and now they've got even more issues from it. And oftentimes those things, the discipline we talk about, things like project management and those, those types of skills are not typically taught to auditors. You don't get a lot of project management skills in your accounting program. Right. And so you're thrown, you know, out the door, so to speak, and into these hugely complex projects. And oftentimes it's just they're overwhelming and you do the best you can, but it just doesn't make it work for you.
- [20:44]
Trent Russell
I remember us talking about this off air. If I could go back and do public accounting again, how much different it would be. Project management, just what I've learned from that side. And then also just time management in general, you know, I mean just the, oh, I did not do a good job of that at all. Especially those last 2ish years, you know, it was just a absolute nightmare. And if I, I've sometimes thought if I went back this is, I would do it significantly different and it would be way better. Probably wouldn't be true, but anyway, it's something, something I think about. So we haven't talked about the book yet. Give us a little bit about the book and then I have just one follow up question for you on there, but tell the audience about the book.
- [21:25]
Bill Engelhop
Yeah, so we're really excited. So I mentioned before that we'd spent time with PwC, KPMG, myself and a team of others spent time working on hundreds of audits, working with thousands of auditors across the way. And these methods that we talked about, where we brought in the Lean Six Sigma and some Agile concepts and applied them to the audit, we started seeing patterns and we could apply the same set of tools and techniques on multiple engagements and get the same kind of results. And after a while it almost became the playbook. And so we completed that work that we did at PwC and then our group moved intact over to KPMG and I talked about how we kind of got in the door there. And again we applied a lot of the same methods that we used earlier because in a lot of ways the audit, what people were doing had not really changed the basic, what they were doing was very similar. Even though there's, you know, huge amounts of automation and AI is coming in, all those other things, the end of the day the auditors still are struggling with review notes, they're still doing project planning. So that playbook in essence that we started, we refined. And so just by happenstance my, my boss and I were sitting around chit chatting and sharing war stories and you know, we started saying, hey, we ought to write a book about this and put down all the stuff that's in here and, and get it kind of codified and share it with others. And that, that was really kind of the genesis of it. And so that became the, as we say, the, the title is managing the hell out of your audit. Because the management piece of it we talked about the discipline earlier is such A key piece to it. And we say that those teams that do really well with it, that's what they're doing. They're really aggressively getting in there and getting their hands dirty with the management piece of it. And so that was the genesis of the book. And it was basically, I would call it the brain dump between myself and my boss. We co wrote the book and it came out in July of 25. So we're very excited about it.
- [23:38]
Trent Russell
Nice. And I don't like to have guests on and then go, all right, tell us everything in the book to where as everybody listening is like, well, why would I buy the book now? So I just. I do want to ask if you could share just one thing, what would be the biggest takeaway? Or if someone did like an 80, 20 of the book or what's that one thing that you could share and go, look, this as a topic is probably the most important thing that I could pass along.
- [23:59]
Bill Engelhop
Yeah. In a way, it's kind of like, who's your favorite child? But I will talk about one which was something that we've really worked hard on, which is this idea around upfront coaching because we find that the way people. And we kind of talked about this earlier, this kind of apprenticeship model or how people learn how to do the work on the job. And there's always new people coming onto the audit. There's always less experienced people doing audit work. And what we found was the coaching model, as it was called, or explaining how to do something to someone was pretty defective. It was usually in a rush. It was usually just a dump. Or, you know, I would call it drinking out of a fire hose, where somebody would come in and say, okay, you've got to go work on this section of the. Of the engagement. Here are the work papers. Here's some references you got to use. Here's last year's work. Call me if you have questions. Goodbye. And maybe that took five minutes or less right. Of time. And so by the person gets in, they actually start digging into it. They got questions, they got problems. And all of a sudden, work rework starts coming out of the system, review notes start flying, and the person gets really frustrated, demoralized, because they're just. They don't have that air of achievement about that. So what we do and we talk about upfront coaching is we turn the model around. So the goal of this practice is what we call to certify the performer. And by certify, what we want to say is, by the end of this coaching session, would you Certify this person is competent and capable of doing the task. And if the answer is yes, they should be good, off they go. If not, we have some additional coaching. And we typically say it takes two steps to do it. The first step we want to do is to set the work up, and we give the staff member the resources that they need. We explain what needs to be done, talk about, like, how it's going to be reviewed, what the deadlines are, what the expectations for quality of the work are, and so forth. And then we let them go off and prepare. And then the second session is typically where the employee or staff member would come in and actually explain to the manager how they want to do the work. Their understanding of, I do this, I do that, I check this, I did that. Here's some, you know, examples, here's some PBCs that I'm pulling and so forth. And after that discussion, if the senior or the manager is comfortable with it, they are certified. If not, they can interject saying, hey, you missed something, or don't forget, or when I did this the last time kind of thing. And you have that dialogue and discussion about it. But it comes from a. The. The individual is building on a. On a knowledge base. They already have some basic rudimentary understanding of it, and now they're testing or teaching it, in essence, to the person that's reviewing them. So we found that to be a really powerful model, just kind of, again, kind of turning that whole coaching model backwards and really putting the onus on the coaching up for the employee or the staff member.
- [27:08]
Trent Russell
So I got all the selfish questions that I wanted to get from you, Bill, and what I think the audience would be most interested in. So, again, make sure to check out the book. The link is in the show notes. But I do want to give the mic to you and let you close us out. What do you want to leave the audience with?
- [27:23]
Bill Engelhop
Sure. One of the things that we saw with our working with the auditors is that there was a pretty constant idea around it. We keep trying the same things over and over again and expect different results. That's the famous Einstein quote. Though Mahimu may have been talking about quantum mechanics, not auditing, but we saw that a lot with audit teams. And one of the things that we really tried to accomplish with this book was to say, look, there are other ways that can get you to what you want from the audit. Fewer hours, more satisfaction from the work, better client relationships. So that's really, to me, the big takeaway is that there is indeed another path to go down, and hopefully you'll have have the opportunity to take it through reading the book or working with us later.
- [28:13]
Podcast Host/Announcer
Hey everyone, thank you very much for listening to this episode of the Audit Podcast.
- [28:16]
Trent Russell
Whatever platform you're listening on right now.
- [28:18]
Podcast Host/Announcer
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- [28:46]
Trent Russell
Thank you all. Have a great one.