63 people answered my latest poll (for which I thank them). It asked two questions.
The first was how their budget was prepared for approval by the audit committee of the board. (Note that while management may express their opinion on the proposal and suggest changes, and we should listen to them, they should not have the ability to make unilateral changes. We have the right to present our budget to the audit committee and it has the final say on the budget.)
The choices were to:
- Develop the audit plan first and base the budget on what is needed to achieve it. I call this a “zero-based budget”.
- Base the budget on the prior year, adjusted for inflation and other factors like growth in the business.
The second question asked whether the budget was sufficient to meet their needs.
24 said their budget was zero-based and 39 that it was based on the prior year’s budget (or similar, such as it was imposed by management). Of the 39, 9 said they would consider moving to a zero-based budget in future years.
Only 28 (45%) said their budget was “sufficient to perform all the assurance and advisory work needed on the enterprise risks that matter”.
Digging a little deeper, 13 of the 24 (54%) who had a zero-based budget said their budget was sufficient. The plus here is that the audit committee could see what…
