Let's get this out of the way up front; Nobody likes to be audited. There, I said it.
Yet internal audits, conducted by employees within an organization, are critical to achieving and maintaining operational objectives. At Transwestern, this independent, consultative activity spans accounting and IT processes across our managed portfolio to ensure we are performing them effectively. Those processes include:
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Accounting |
Information Technology Access control Changes to infrastructure (both hardware and applications) Security System performance |
LESSON NO. 1: WHAT YOU DON’T KNOW DOES HURT YOU
Periodic internal audits prepare an organization for close examination by external sources, such as regulatory audits (e.g., annual Service Organization Control, or SOC audit) or those led by customers. There is no shame in uncovering and fixing mistakes and errors before they are found by outsiders, though this mindset arguably can take some getting used to.
For example, Transwestern’s compliance group discovered a property management team was not getting approvals for tenant improvements before a service contract was signed and work scheduled. In another case, bank reconciliations were not reviewed and approved by the accounting manager. We proactively remediated both situations, which would have been identified and reported by external auditors down the road.
Many of our customers look closely at our SOC report. Poor results point to flaws in how we operate. Monitoring our work and quicky correcting any mistakes is ingrained in a culture of continuous improvement and is what we owe our clients.
LESSON NO. 2: A SUPERIOR PROCESS DRIVES SUPERIOR RESULTS
Audits can be arduous and time consuming for everyone if not done properly. We’ve built a comprehensive audit program, with standardized processes and procedures, managed by a strict schedule, and delivered with the support of checklists and automated tools. The rigorous process allows us to complete more audits with fewer resources, broadening our scope, lessening the impact on our teams, reducing costs and – most importantly – raising the bar on service delivery.
Transwestern’s Compliance Scorecard, for example, uses sophisticated data analytics to measure operational performance against established KPIs and present results in a simple, digestible manner. Each KPI is assigned a level of risk, helping us zero in on high-risk processes.
Another important characteristic of Transwestern’s program is that many of our audit tools use live data from key production applications, such as MRI, Yardi and Workday. This approach, which lets us get right to the core of our processes by examining the raw data, significantly expands the scope of our audits and provides more accurate results than the inefficient (and often inaccurate) practice of "sampling." It also saves time because we don't have to interrupt employees’ daily work with requests for information.
LESSON NO. 3: DOING THE WORK UP FRONT PAYS OFF
By designing a structured plan built on repeatable, automated audit processes, a company becomes more efficient and more proactive. It can act on potentially risky conditions before they become problems. It also can target audits on specific entities that seem to have trouble maintaining compliance and provide additional training to help them be more productive.
Transwestern has significantly improved its compliance scores through its rigorous internal audit program. Furthermore, for the last four years, the company has had a clean, “unqualified” SOC report, indicating our Accounting and IT controls are properly designed and the processes we use are performed effectively. That is a tough standard to meet, and we’re proud of this accomplishment.
When done right, the audit process becomes a collaborative partnership between Operations and Compliance. Errors are fixed before they become problems, teams become better at what they do, and organizations are confidently prepared to stand up to any external audit.
Dan Ashdown is Director of Compliance at Transwestern. Based in St. Louis, Dan works closely with Asset Services to ensure effective operational standards and drive high performance for Transwestern-managed properties nationwide.
SEE ALSO:
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- Leveraging Building Technology for a New Tenant Experience
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