Turning Audit Lessons Into Firm-Wide Improvements

Sam explains how audit firms can break the cycle of repeated mistakes by systematically capturing lessons learned and turning them into actionable improvements. The conversation covers everything from individual preparers documenting their own review comments to firm-wide post-engagement debriefs that identify patterns and drive changes to templates, checklists, and procedures. By building a culture where every audit strengthens the firm, teams can reduce wasted hours, improve quality, and create a less stressful work environment.

• (00:07) - Turning Audit Pain Points into Progress
• (00:29) - Learning from Review Comments
• (03:16) - Documenting Lessons Learned
• (04:02) - Post-Engagement Debriefs
• (06:34) - Creating a Lessons Learned Log
• (07:59) - Using OneNote for Better Organization
• (09:15) - Implementing Changes and Improvements
• (16:43) - Training and Team Buy-In
• (24:04) - Building a Learning Culture

Learn more at https://mansouradvisory.com/

Connect with Sam
https://www.linkedin.com/in/sam-mansour-cpa-2a755b271

Connect with Abdullah
https://www.linkedin.com/in/abdullah-mansour-454959108 

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This podcast is a production of the Earmark Media

Creators and Guests

Host

Abdullah Mansour

Co-Founder & COO at Mansour Advisory Group

Host

Sam Mansour, CPA

CEO of Mansour Advisory

What is Audit Smarter?

A practical podcast series that transforms audit professionals from checkbox practitioners into strategic advisors. Each episode tackles a specific audit challenge—from risk assessment mistakes to client management—providing actionable solutions through real-world examples and practical frameworks. Learn to deliver higher-quality audits in less time while avoiding the most common pitfalls that plague the profession.

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Abdullah Mansour: Welcome back to an episode of Audit Smarter. I'm Abdulla mansoor, joined once again by Sam Mansoor, CPA. Today's topic is a powerful one how to turn audit pain points into progress. Sam, where does this process start?

Sam Mansour: Yeah, well, thanks for having me again and I appreciate everyone listening in. Um, you know, [00:00:30] this this topic is it's it's really interesting because I found that throughout my career, we can learn a lot from the, you know, review comments that people get the mistakes that are made in our testing or the work that we do. And either we can re continue to repeat that cycle of mistakes for sometimes years, or we can figure out how to cut it off. So when we talk about learning from, you know, Learning [00:01:00] these lessons from what we are encountering. What we're what we're seeing is feedback provided by reviewers or clients or changes in the industry. We we need to figure out a way to take that back to our firm and make it something that where we're not repeating the same mistake over and over again. Okay, so let's say that, you know, a staff member regularly receives a review comment on, you know, testing cash, [00:01:30] for example, because they forgot to include references from the lead back to the supporting check registers. Um, if there's some reconciling items, for example, what that person needs to do is add that at the preparer level, they need to say, okay, I learned a lesson by getting this specific review comment. Now, instead of doing the next job and then waiting for the reviewer to catch this issue that I commonly fall into, [00:02:00] Do I need to figure out how to store this review comment that I received? And let's say you have a word document and you title it cash and you put in there the comment that you received, right, that you forgot to make these references from the lead back to the outstanding check register.

Abdullah Mansour: Yeah.

Sam Mansour: Now when you go and test that section again, you need to review your own work. So you complete this testing in that cash section. You need to go in there and say, okay, I commonly forget to [00:02:30] make the reference back from what I see in this lead schedule. Back to where that was tested, that work order was tested, and then the connection to the outstanding check, um, listings that kind of tells that story. I have a problem with that. I have a problem with making sure that we include all those references. So now when you get done with testing that cash section again, the preparer should go in there and say, okay, let me double check. Let me review [00:03:00] my own work against this list of review comments that I received before it goes to the next level of review, because you don't want them to have to repeat the same exact review comment back to you. Does that make sense?

Abdullah Mansour: Yeah, that makes sense. Yeah, yeah.

Sam Mansour: So it's a form of documenting what we've learned, the lessons and then double checking our own work. Now I gave a very simple example at a very basic level, the prepared level. But if you think about it, it could be applied throughout the [00:03:30] audit firm. Right. It's not just that one preparer in that one instance of testing cash that should be taking that lesson, but it's from the staff accountants to the seniors to the managers, to the partners, even to the administrative team members in the firm. Everyone should be thinking that way, right? We learn the lesson. How do we capture it? How do we self review so that we're not wasting other people's time? Now specifically talking on like the engagement [00:04:00] letter Ladder levels. It starts with the post engagement debriefs. Every team should sit down and ask what worked, what didn't work and where did we get stuck? So that kind of helps us as a team, as a firm, as a team, flush out those areas that now become those lessons that we then document and we make sure that they don't happen again, whether it's either through Self-review or including it somehow in our review process. [00:04:30] But they get flushed out in these posts engagement debriefs. Because if you're not holding these post engagement debriefs, which a lot of teams don't because they get down with one audit engagement and then they're just jumping into the next one.

Abdullah Mansour: So they don't have time for those debriefs. But they're critical to to do them.

Sam Mansour: They are they kind of get like they're kind of like this, oh, administrative stuff that it's like, why do we need to do it? Right, right. But how do you flush out what worked, what didn't work? And where do we get stuck? If you're not sitting down having those debrief, debrief debriefs, [00:05:00] right. If you just wait every six months to come to a team meeting and we're like, okay, hey, what worked and what didn't work, those busy season, it's like so difficult now to recall all those little instances. So the Post-engagement debriefs, as much as they might seem like a an administrative step, that's like, oh, let's just skip it. It really helps flush out just the smallest things on an engagement by engagement basis. So without reflection mistakes repeat. Okay. Without capturing what we've learned, [00:05:30] we're almost guaranteed that they're going to repeat themselves, whether it's in that specific person. Let's say again back to that specific preparer. They repeat that mistake over and over again and continue to get the review comments, which I'm sure a lot of people listening to this will will understand what I'm saying. Or you hire a new person to now test cash, and then they get in the cycle of those same exact mistakes. Because typically what I've seen reviewing work papers is that the mistakes that they make, very rarely is it just, oh, it's just this one person made this one mistake [00:06:00] and this one instance, and I'm never going to see that mistake ever again across different team members. People fall into similar mistakes. Okay, so we don't we need to reflect so that we don't repeat. And then the debriefs must be part of the audit closing process. Like don't make it an optional thing that oh we'll just skip it this time because, you know everything's fine. We don't need to worry about it. I still think we need to sit down. I still think we need to discuss and reflect.

Abdullah Mansour: And that sounds super important. Um, that's a very helpful tip. What [00:06:30] are some ways firms can capture those lessons in a meaningful way?

Sam Mansour: So yeah, I would say create a lesson learning log. Um, that is really important. I kind of I described it at the beginning of this conversation as maybe like a word document. I know you like to use OneNote. Maybe you can kind of explain the benefits of that, but just a simple word document where you break out planning, field work, wrap up, you go in and say, okay, I tested cash here. The review comments I got. So we're logging it in there. Um, tag notes by category. [00:07:00] So again planning fieldwork client behavior. So so you can spot firm wide trends. Because if it's just somebody logging something in their own notebook or in that word document in their file, again, I think you should talk to them about why you think OneNote is good for this. Because if we just if we're just doing it individually on a drive or on our own C drives, we're not able to do that. Trend analysis across these are common issues in the firm. And then use the log during the next year's planning to [00:07:30] prevent the repeat issues going forward. Right. So reflect on the mistakes made by, you know, after the specific engagement this year, and make sure you don't repeat it on engagements this year. But then also make sure that you're capturing all of those comments. So when we walk into the next busy season, we're reducing the errors that come along. And I know I mentioned, uh, you know, OneNote versus uh, word. I mean, what you're a big proponent, I know OneNote, what I mean, what are your thoughts on the benefits and maybe how to use that in this instance?

Abdullah Mansour: Yeah, [00:08:00] it sounds like it would be great to have a log that you can look back at like previous logs. And so OneNote. Onenote helps organize it so that you can have like one folder for one client. And then you can have several different um pages essentially underneath that. So. So just organizes it a lot better. So you want to do it by quarter by year. You click on the client and then it opens up all the quarters or years. And you can go to that. And then you can have that that log. That's why I would use OneNote over um word. [00:08:30] If you haven't used it, definitely check it out. But I'm sure most of you have. Yeah, that's the benefit of using OneNote in my opinion.

Sam Mansour: Yeah. And when I've seen OneNote, I mean, it seems like using the different tabs in there, it just helps with organization. It's like a file structure on a network. It's easier to go and find things rather than like a word document where you're just having to scroll and scroll and scroll and scroll.

Abdullah Mansour: Yeah for sure. Yeah, definitely. That's the best. That's a great way to describe um, yeah. The the power of OneNote, I guess. Well, [00:09:00] you mentioned using the law log during next year's planning. How can those insights fuel improvement from like the the lessons log, lessons learned log? Um, yeah. How can those insights feel improvement?

Sam Mansour: So if we capture the lessons learned or the mistakes made, now we have that data memorialized so that we can access it. You know, imagine imagine going to [00:09:30] a meeting and someone says, tell me all the good things that happened last year and tell me all the bad things that happened last year. You'll only get probably a fraction of those instances that were good and bad, and you'll probably get the ones that really stuck out to people, but you're not going to capture all of them. So what we want to do is try to reduce wasted time and errors across the board, whether they're big or small, because if they're small, let's say they're [00:10:00] 15 minute That issues over the issue takes 15 minutes if you multiply that by 1000. Now it's starting to take a lot of time, right? Because it's not just one person, but it's, let's say multiple people doing it across multiple engagements. So that 15 minute little issue becomes very time consuming across the firm as a whole. And let's say it's not 10,000 hours of wasted time, but what if it's 1000 hours of wasted time? And if an average person works [00:10:30] 2080 hours in a year, then 1000 hours of wasted time is half a position. It's half of one person time. Okay, so the small ones that we can't recall easily six months later are kind of the ones that we're really wanting to target.

Sam Mansour: We want to catch those little ones. So having these logs, um, helps us by updating templates. So we, I know a lot of people will create templates and put them inside their engagement files. Well, go in there and change the templates. Make [00:11:00] them better in terms of capturing the information or put in their different ways to log information when you're on the engagement. Maybe that'll help reduce the error rate. Um, so let's say on the template, you know, you if you put a number in the cell, it'll highlight green, like you said, some kind of conditional formatting. And it has to be above a certain number. Now that could be a great way because if if the cell is still red, that means the number wasn't input. Or [00:11:30] if you put an incorrect value in it won't turn green. So it's kind of just at a at a quick glance, you can say, okay, I'm checking for errors because instead of, let's say in the template before you had no conditional formatting in those cells. So someone had to go through and identify that this is a wrong number. Right? Or this is a wrong input by looking at it, there's no highlight there. But if you have a conditional formatting it'll just stick out. So we decided to upgrade the template now because we found a better way of capturing this [00:12:00] mistake that was just constantly repeating itself. Right. So we upgrade our templates.

Sam Mansour: Maybe, um, if we're constantly let's say we're going out and we're collecting. We're doing we're doing inquiries at certain internal controls. We're learning about client, the client's internal controls. And people constantly miss, um, let's say compensating controls. So so it's a it's a smaller environment. We can't segregate duties properly. And so we need to have compensating controls. But [00:12:30] for some reason, our team members are just not great at documenting a section that says compensating controls. And they don't highlight it and they don't call it out. So it's an area that that we've commonly missed because we have inexperienced people. For example, instead of just telling our team members, hey guys, remember to look for compensating controls, we should go into the template and put a header that says compensating Controls and highlight a section in yellow, forcing them to fill that out when [00:13:00] they're in the field because I looked at the template. Okay. Similar thing with checklist. A lot of auditors love to follow checklists. So if we're going through checklist, maybe there's some things that we should add to it. And a big big a big thing that people like to, you know, kind of complain about or don't like is, oh, we're just adding more things to the checklist. I mean, how many things are we going to add to this checklist? I'm like, we should just continue to add things to the checklist until we stop missing them.

Sam Mansour: So maybe we add and add and then eventually if it's just like wow, [00:13:30] we're just checking things off. These are just so ingrained in our culture. We never miss these things. Okay. Maybe consider taking it out of the checklist. But for now, I would take those lessons learned and make sure you're updating the templates, make sure you're updating checklists, and then also look at firm procedures. For us as auditors, we're always harping on systems and processes and procedures. So if we're talking to clients about that we need to kind of look back at our at our own procedures and say, do we need to be doing something differently here? Right. [00:14:00] Do we need Processing this information. Reviewing this information differently. We will be staffing our teams differently. What processes and procedures do we have that aren't working? That are causing these errors that we are now able to see across the firm. Because we're logging them. So we're logging the lessons learned. We're somehow categorizing them, grouping them, looking for trends. And then we're asking ourselves, do we need to update templates. Do we need to update checklists? Do we need to update our procedures. And maybe it's a combination of those things that [00:14:30] are helping us be 100% positive. Positive. When we walk into next year, we're eliminating a lot of this slack, right? All these lessons that we learned, we're not going to repeat those mistakes because we've upgraded templates, checklists and procedures.

Sam Mansour: People are still going to make some mistakes. I get it, but let's try our best to take those lessons learned, put them into, you know, physical things in our in our company that we can now rely on, look at and use [00:15:00] that we're not just relying on people's memories to catch things, but now they're ingrained in our documentation and in our culture. If documentation was weak, we need to add guidance. So let's say that, you know, someone goes in there, you test a certain section and people are just like really messing up. They're just not doing it correctly. We have to ask ourselves, is that a training thing? Okay. Yes it is, but maybe it's still a complicated area. I remember I was testing as an auditor for a farm, and there's some different accounting [00:15:30] rules associated with that. And there are certain ways to calculate different, uh, items related to crops and things like that. Every year I get into those work papers, I'll be like, oh, shoot, how did those journal entries work? What was that again? Because I only tested like 1 or 2 of these a year. So if you add guidance into those sections where we're not as strong, you may be like, write out instructions for the future that maybe are not part of your audit documentation that's in the audit file. But you leave a trail of breadcrumbs. You know, even.

Abdullah Mansour: Record.

Sam Mansour: Video [00:16:00] of yourself talking about it. Okay. And then if timing was off and had the lesson learned we need to adjust the scheduling. So maybe it's adjusting scheduling. Maybe it's adjusting the work papers by including guidance. Maybe it's adjusting the checklist. There's lots of different things that we could do to fuel and improve our audit documentation, our audit procedures, how we operate. We shouldn't let these lessons learned either. Just pass us by without us capturing them and doing something with it, because that [00:16:30] ultimately costs us a lot of time and money. So then finally, I mean, I would say share the insights in team meetings, use them to refine training and reinforce best policies, procedures and practices. So it's it's it's one thing to update the documents. Right. So let's say you're a person, you click on the document and you open it up and you say oh there's a section now about about compensating controls. Oh. And if I click on it, there's a note in here that gives me some guidance on what I should do. Well that's great, but [00:17:00] is that the first time that someone should be exposed to this change. Absolutely not. Accountants. I think we in general are not the best at wanting to have and holding trainings, or we just wait until one time during the year to do like a CPE. The problem is that these lessons, these changes need to be communicated to the team. We need to be talking with the team about them, because we need to give them an opportunity to come back and say, hang on, I don't understand this. I understand that this template has been [00:17:30] updated. I understand that it's now in the checklist, but how do I go out and test it? Exactly. So including this stuff in team meetings is absolutely critical.

Abdullah Mansour: Yeah, definitely makes sense. I can see how that'd be very useful for, um, any team or CPA firm. Any advice on how to get, uh, team buy in?

Sam Mansour: Yeah. I mean, there's been a lot of stuff out there about, you know, giving people a why, the reason behind things. I think that is absolutely critical. If people just think that they're doing. [00:18:00] They're filling out more paperwork. They're Their their checklists are becoming longer, their templates are becoming longer. They're becoming more detailed. They're asked to do more work. People get frustrated, however, if they understand why we're doing this. So we go out there and we say, okay, look, guys, the issue is that if we're documenting internal controls and we're missing and there's not enough, uh, there's not a strong control environment where they can't segregate duties properly. We need to document [00:18:30] these compensating controls. Okay. Get it. Why are we doing this? Why are we documenting? Documenting this? Why is this even important at the client level that they have these compensating controls in place? So we explained to them why it's important that they have this. Okay. Then we explain to them why it's important that we document it and we need to explain to them why. You know, this is identified basically as a trend that we saw in the firm that's putting us as a firm at risk because we're not properly documenting the specific [00:19:00] area. So now they understand and then they have the opportunity to challenge that, to say, oh, well, that doesn't make any sense because, you know, they might have some reason behind it. They get the opportunity to talk to you, sure that they are now born into this new change that we're rolling out, so that they're not just looking at these work papers and saying, oh gosh, this is just more paperwork and just checking boxes and moving on. We talked about pencil whipping one of the prior episodes.

Abdullah Mansour: Yeah, [00:19:30] yeah. They see the true benefit behind it.

Sam Mansour: Exactly. So then when they're going and they're using these tools, they're they're, they're they're okay using them. They're not just frustrated and flying through them, which also can then cause another problem for us because we're trying to reduce the errors right in the process. We're trying to we're trying to leverage these lessons learned. And if they're not buying into it and they're just checking a box, well, what what's the benefit? Now we've just created another box for them to check. But they're not they haven't [00:20:00] they themselves haven't actually learned anything. They're just filling out a box because we said to fill out a box.

Abdullah Mansour: Yeah.

Sam Mansour: Okay, so we want to make sure that the improvements are visible. So people see them, they hear about them. They understand them. We want to show how feedback improves an audit or reduced hours. So they see the increase potentially in the workload from documenting the, you know, these lessons learned or these errors. Then they see that these are now going in and work to put them into templates. And then there's [00:20:30] work to fill out those templates that are no longer okay. They need to understand that what we're finding here is either improving our audit quality or efficiency and or efficiency, and most likely the thing that they're having a hard time seeing, I guarantee you, is that it can reduce hours. They're just thinking it's going to cost me more hours to do this. I have to do more work. But they're not understanding that on the back end. It's costing us a significant amount of time in the review [00:21:00] process, for example by acting these errors. Writing review comments may potentially have to go back to the client to improve our documentation or get additional samples selected and testing out. They need to understand that, yes, they're going to take an extra 15 minutes to fill out this work paper, but on the back end it's costing us on average an hour. Okay, so we're in net savings here 45 minutes. And we've improved our our audit quality. And then I would recognize team members who contribute constructive [00:21:30] ideas. So you'll find that there are people on the team that generally are like ah whatever I don't care about this. This doesn't make any sense. Let me just move on in my life. Right. Just go. I'm going to go to work.

Abdullah Mansour: Yeah, yeah.

Sam Mansour: And there's other people that really take it to heart, and they're like, this makes sense. Like, I'm really behind this, and they're and they're really proactive in documentation. They want to improve the templates. They have ideas. You know, they're contributors to it. Those people should be recognized because they're helping us [00:22:00] in the line of improvements that we are wanting as a firm. We don't want them to be passed over. We want them to understand that they're recognized for that. The other thing is, especially if we kind of do it publicly, it it helps the rest of the team understand that this is a positive behavior, and we want you to do it too. Right. If someone goes and helps with improvements and then and everyone's just silent about it, then everyone says, well, what's the point of doing that? They're just taking more time. They're [00:22:30] not. There's no recognition, there's no positive association or feedback with this. So they just don't see the benefit. So it's really good in the firm to be encouraging of it, to be talking about it and to be rewarding people for it. Um, improvement is easier to embrace when it's linked to wins, not just extra tasks. We kind of talked about that, where the extra task is filling out the worksheet, it's filling out additional checklists. That's the extra task. But what's the win? The win here [00:23:00] is reduce hours. The win here is better audit documentation. The win here is less stressed during a peer review. The win here is being better auditors in general, you know, as we're just helping the profession improve by being better at what we do. There are lots and lots of wins, so we need to highlight to them the benefits, acknowledge that there is going to be a cost and time because of these improvements. But but the benefit significantly outweighs that cost.

Abdullah Mansour: Yeah, that's kind of interesting. [00:23:30] I've heard that a lot like from from employees and different companies. Um, it's like why why add this extra task, you know, and then until you explain the, the big benefit and the big picture of, you know, this is where it's going to help you in the long run, then they become more on board. But before that, they they try to they try to disagree with you and say, we don't need to do this. So I totally understand where you're coming from with that. Um, well, Sam, what's the big picture benefit?

Sam Mansour: Yeah. So we kind of talked a lot about, you know, the engagement [00:24:00] level and getting the team on board and communicated with. But as a firm like just in general, a kind of a higher level, you build this learning culture where every audit strengthens the firm. So it's a it's an improvement. It's an upgrade, right? We we do. We go out, we do work. And then we say we reflect on that and we say, okay, what do we do. Good. What do we do bad? What are we to improve? What needs to change. We take [00:24:30] those lessons learned and then we implement change in the firm. And now it's an upgrade. So we are now in the mode as a firm. We're in the mode of learning. And then we get our team members in the mode of learning and upgrading. And it's just it's better from a culture perspective, from a training perspective, from a getting better better at your, you know, a lot of people, when they come work for you, they say, hey, you know, well, then they're thinking in their mind, if I make this career move, if I come and work at this firm, is this going to look good on my resume? [00:25:00] So there's this culture of hearth and upgrading, constant learning. People want to be part of environments like that, right? Those are really important to be, you know, to have a culture of learning, to have a culture of enhancing and moving forward.

Sam Mansour: Over time, your audit methodology becomes smarter, more efficient and more resilient because now you're not just going out there, you know, digging holes and going home. You're going out there and you're [00:25:30] thinking it through, right? Because eventually the culture becomes such that before people, even because we know what's going to happen at the end of the audit, we know the questions that are going to be asked of us. What have we learned? You know, what mistakes have we made? Now, eventually it can become so ingrained in people that they go out into the field with that mentality from the very beginning. So imagine what things maybe they would almost self-correct or catch in the [00:26:00] field, because they know that that's going to be the eventual expectation if we don't have that culture. People go out and they do work and they come back and they say, okay, what do we learn? You know, oh, shoot, we missed this. Oh, shoot, we did that. Or we could do this better. Okay. If you know you're going to have that conversation, the next audit that you go out on, you're not wanting to go back into the next meeting and say, oh, shoot, oh, shoot that. You know, because you're you're already thinking about it now.

Abdullah Mansour: So it's kind of forcing them to be proactive and thinking, [00:26:30] thinking ahead of time a little bit. Is that kind of very proactive.

Sam Mansour: Yeah. To to think a few steps ahead. So so really the overall benefit is that learning culture, that culture of desiring for improvement. It's it's something that we start out with by doing kind of at the tail end of the audit, if it's a new thing for our firm, but then it, it just spreads throughout the culture to where now it's like, well, in advance of even the work happening and [00:27:00] then ideally well in advance of us even going into busy season and then in into the the workpapers, the checklist, the documentation. It's just it becomes everywhere now and then. Once you've achieved that, it's I have found audit environments like that are much less stressful to be in because everyone's just so ahead of the game and so proactive for a lot of audit firms that are probably listening to this, or they're thinking like, oh, what a dream that would be. You know, how unrealistic is that? But it's very realistic if if the people in the firm are [00:27:30] bought into this idea and they're constantly upgrading, always ahead of the game, managing their clients. Well, um, and they're and they're setting proper boundaries and expectations with their clients to facilitate this kind of an environment, life just becomes better overall.

Abdullah Mansour: Sam, thank you again for the great information and episode and for everyone listening. Thank you for tuning in and we'll catch you in the next one.