lean for internal audit - fmi*igf choquette and c szelestowski_lean for... · reduce claims and...

Lean for Internal AuditOverviewNovember 26, 2015

Copyright of this material is owned by Lean Agility Inc. Not for duplication or distribution without prior written consent.

Paul ChoquetteLean Six Sigma Black Belt, CIA, CCSA

Craig SzelestowskiMBA, Lean Black Belt

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LEAN

less inventoryNOT

less people

The Challenge

With fewer resources :

you must still deliver as much, and maybe more to your clients

faster and better while increasing staff engagement

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94 days 5 days

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Retirements backlog reduction plan

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Date

Cas

es i

n q

ueu

e

Planned reduction

In queue actual

New process start date

Retirements ReviewImprovement plan over three weeks

Stabilization(remaining cases too far in the future to process)

Plan and Actuals

362

370

378

375

378

410

416

423

421

427

404405

382383

368361

361339

338317

307295

283273

289251

260229

223207

175185

141163

117141

110119

10497

11075

9653

8750

6750

8350

&A

Page &P

New process start date

In queue actual

Planned reduction

Date

Cases in queue

Retirements backlog reduction plan

Retirement Volumes

DateDRAFTIn queue actualPlanned reductionIn TotalDRAFTIn queueIn Total

15/01/201332362923Baseline Avg (14th to 25th)23393958

16/01/201323370932

17/01/201323378949Plan to eliminate backlog in 20 days (as of 25th)

18/01/201314375950427 in the queue22per day

21/01/20131137895723 average new draft per day23per day

22/01/20134641099745per day total

23/01/201320416999

24/01/2013144231003

25/01/201330421916

28/01/201318427887

29/01/201330404405886

30/01/201329382383896

31/01/201346368361897

01/02/201362361339906

04/02/201367338317913

05/02/201375307295929

06/02/201387283273937

07/02/201392289251951

08/02/201398260229845

2/11/1385223207807

2/12/1361175185799

2/13/1350141163795

2/14/1337117141792

2/15/1330110119795

2/18/132610497918

2/19/134311075944

2/20/13309653974

2/21/1378750971

2/22/1336750888

4/18/13118350618

choqupp:All except validation & final validation

choqupp:All except validation & final validation

choqupp:Pay Cut Off

Reduce time to staff a position by 50%

Reduce claims and payments time: 87 14 days

Waiting time for a hearing: two years four months.

Top 35 companies to work for in Canada list Report on Business Magazine

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Difficult to believeuntil you see how.

What is Lean?

A way of thinking + habits leading to speed, flow, effectiveness and efficiency

Find ways to stop doing things that are not necessary in the eyes of your Client/end user/key stakeholders.

Apply this found capacity to higher value added activities, creating speed and quality without working harder or adding resources.

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Business System

People System LEAN

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Processes that flow; constantly

makes problems

visible

Willing, able, and enabled people who constantly

solve these problems

Faster, better, more capacity with inspired

people

Elapsed Time: 90+ % non-value added

It takes us three weeks to process a file

but the time we spend actually touching it or working on it is only four hours.

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Flow

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If you took a file, put an imaginary video camera on it and sent it through your process, what would it see?

bottlenecks

chronic errors

missinginfo

backlogs

unbalancedwork

last-in,first-out

unnecessaryapprovals

too manyhandoffs

waitingwaiting

waiting

clarifications

unnecessarysteps

How backlogs often develop

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MURA:Unevenness

MURI: Overburden

MUDA:Waste

createsmade

worse by

DefectsOverproductionWaitingNot using skillsTransportInventoryMotionExcessive Processing

THE CLASSIC EIGHT LEAN WASTESDOWNTIME

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DefectsWhen something is missing, or must be: corrected, clarified, or adjusted/adapted in order to be used.

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Overproduction

When The work is started too

early Too much work passed

to next step Too much work is taken

on

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Waiting

When the work flow is stopped to wait for

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Not fully utilizing people

When people are not used to their full potential

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Transport

When material and information travels further than necessary

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Inventory

When work piles up and stops flowing.

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Motion

People move more than required to do their work

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Excessive Processing

When the work is processed more than required.

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Process DescriptionCreate blue file with Post-It notes

JOB TITLE File Creator

1- Create a file

10P/T: seconds

2CT: minutes

100 C&A: %Inv/WIP 52 Piece(s)

Batch: 3 Piece(s)

Process DescriptionAdd up the first line, sign

JOB TITLE Addition A Officers

2- Add Line A

20P/T: seconds

2CT: minutes

100 C&A: %Inv/WIP 5 Piece(s)

Batch: 3 Piece(s)

Process DescriptionAdd up the second line, subtotal, grand total, sign

JOB TITLE Addition B Officers

3- Add Line B and Grand Total

30P/T: seconds

72CT: seconds

99C&A: %Inv/WIP 6 Piece(s)

Batch: 3 Piece(s)

Process DescriptionVerify accuracy of file, sign

JOB TITLE Supervisor

4- Verify File

10P/T: seconds

5CT: minutes


Batch: 3 Piece(s)

Process DescriptionVerify accuracy of file, sign

JOB TITLE Manager

5- Review & Approve

15P/T: seconds

29CT: seconds


Batch: 3 Piece(s)

Department of Addition (DoA)Current State Value Stream Map (VSM)30 3030

Requestor30 3030

Requestor

FUTURE STATE

Minimum Lead Time: 21 weeks (5 months)Maximum Lead Time: 67 weeks (7 months)

Touch Time: 19 days

Reference ChecksDelegated Manager 0

CHRBP: Build templates, contact references, check logistics, evaluation of checks; 2 references/candidate

P/week Inv P0 0PT 15 minsCT 3 wks

C&A 0 %

Inv C 0Total 0Batch 1

Correction Demand % Time/ week0 0 mins1.0 0 mins2.0 0 mins3.0 0 mins4.0 0 minsTotal correction demand

OK 90%

NOT O

K 10%

Create forms and signDelegated Manager and Board 0

Board, candidates, exams, screening forms, (3X)

P/week Inv P0 0PT 1 hrsCT 2 days

C&A 0 %



Follow Up if references not okDelegated Manager and Board 0


C&A 0 %



Check References Lead Time: 2-4 weeks BIZ Touch Time: 2-3 hours/candidate

Compile Assessment results/reportDelegated Manager and Board 0


C&A 0 %



Review Assessment results/report pkg & create pool

Delegated Manager and Board 0


C&A 0 %



Create Results Letters

HR Assistant 0


C&A 30 %



Review Results Letters

HR Advisor 0


C&A 66 %



Fill out Right Fit formDelegated Manager 0

CHRBP


C&A 0 %



Review Right Fit FormHR Advisor 0

P/week Inv P0 0PT 30 minsCT 2 days

C&A 50 %



Verify Conditions of EmploymentHR Assistant 0


C&A 50 %



Notify Candidate VerballyDelegated Manager 0

P/week Inv P0 0PT 15 minsCT 3 hrs

C&A 0 %



Value Added Fill out Security Clearance FormDelegated Manager / Admin Asst 0

CHRBP


C&A 0 %



Conduct Security Clearance (Reliability)Security 0


C&A 0 %



Official Languages ProcessHR Assistant 0


C&A 50 %



Security Lead Time: 1 day (existing clearance) 6 months (no existing clearance, Secret) Touch Time BIZ: 10-30 minutes

Touch Time HR: 5 minutes

Conduct Security Clearance (Secret)Security 0


C&A 0 %



Re-Verify Priority ClearanceHR Advisor 0

Occurs if more than 2-3 months from first priority clearance; Non-Value Added?


C&A 0 %



Create Notice of ConsiderationHR Assistant 0

CHRBP


C&A 0 %



Create Notice of AppointmentHR Assistant 0

CHRBP


C&A 75 %



NO COMPLAINTS

COMP

LAIN

TSInformal Discussion

Delegated Manager 0CHRBP


C&A 0 %



Prepare Letter of OfferHR Assistant 0


C&A 75 %



Review Letter of OfferHR Advisor 0


C&A 75 %



Verify Letter of OfferDelegated Manager 0


C&A 20 %



Send letter to employeeHR Assistant / Coordinator 0


C&A 0 %



Candidate signs letter of offerCandidate 0

CHRBP


C&A 0 %



Value Added

Enter signed letter into PeopleSoftHR Assistant 0

CHRBP


C&A 80 %



WF Officer/Manager

PT: 2 minutesCT: 0.5 days

Issue request for HRSR

Clerk/Admin Coordinator

PT: 5-10 minutesCT: 0.5 - 1 day

Create HRSR

WF Officer / Manager

PT: 2 minutesCT: 0.5 day

Review HRSR and make changes (if required)

Regional Management Board(meets every 2 weeks); covers WMB challenge


Regional Management Board Review

WF Officer or Coordinator


Send Signed docs to HR

Can be done in parallel earlier in the process if appropriate eg. At initial screening

Can be done in parallel earlier in the process if appropriate

Can be done in parallel earlier in the process if appropriate

Eliminate expiration date on pools where posssible

Add local, regional, national and interdepartmental pools to website

Send written questions in advance to referees

Tools: Value Stream Mapping

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Sustaining: Visual Management

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Sustaining: Stand-Up Meetings

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Typical Challenges to Implementing Lean Government

10% technical90% human

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Typical Challenges

10% technical90% human

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Autonomy

Purpose

Mastery

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How does Lean apply to Internal Audit work?

Specific Lean Issues in IA Too much work taken on lowers

productivity and quality Audit plan not executed consistently

inconsistent data needs rework or re-collection

Documents: Audit Plan and Audit Reporting Too many edits, takes too long and too much effort to get to final version

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TOO MUCH WORK TAKEN ON

Specific Lean Issues in IA

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Too much work is taken on

When we multi-task*, we get less done.*actually, switch-task

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Time Yourself

Scenario 1 (Focus-Tasking)1. Write:

Multitasking eats time1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

2. Note how long that took.

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Time Yourself

Scenario 2 (Context Switching)1. Write one letter, then one number, one letter, one number, etc:

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2. Write down how long that took.

Multitasking eats time1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

AUDIT PLAN NOT EXECUTED CONSISTENTLY INCONSISTENT DATA NEEDS REWORK OR RE-COLLECTION


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Visual warning

Predictive

Preventive

Poka Yoke Error Proofing

Sustaining: Stand-Up Meetings

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Repeatability and Reproducibility Gage R&R

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Assessment Agreement

Appraiser # Inspected # Matched Percent (%) 95.0% CI

Sally 50 3 6.0 ( 1.3, 16.5)

Joe 50 9 18.0 ( 8.6, 31.4)

Betty 50 1 2.0 ( 0.1, 10.6)

Bob 50 5 10.0 ( 3.3, 21.8)

Sue 50 4 8.0 ( 2.2, 19.2)

David 50 12 24.0 ( 13.1, 38.2)

# Matched: Appraiser's assessment across trials agrees with standard.

Individual accuracy


Appraiser # Inspected # Matched Percent (%) 95.0% CI Sally 50 25 50.0 ( 35.5, 64.5) Joe 50 34 68.0 ( 53.3, 80.5) Betty 50 22 44.0 ( 30.0, 58.7) Bob 50 28 56.0 ( 41.3, 70.0) Sue 50 25 50.0 ( 35.5, 64.5) David 50 36 72.0 ( 57.5, 83.8)

# Matched: Appraiser agrees with him/herself across trials.

Repeatability

# Matched: Appraiser agrees with him/herself across trials.

David 50 36 72.0 ( 57.5, 83.8)

Sue 50 25 50.0 ( 35.5, 64.5)

Bob 50 28 56.0 ( 41.3, 70.0)

Betty 50 22 44.0 ( 30.0, 58.7)

Joe 50 34 68.0 ( 53.3, 80.5)

Sally 50 25 50.0 ( 35.5, 64.5)

Appraiser # Inspected # Matched Percent (%) 95.0% CI


Gage R&R (contd)

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# Inspected # Matched Percent (%) 95.0% CI

50 0 0.0 ( 0.0, 5.8)

# Matched: All appraisers' assessments agree with each other.

Reproducibility


# Inspected # Matched Percent (%) 95.0% CI

50 0 0.0 ( 0.0, 5.8)

# Matched: All appraisers' assessments agree with standard.

Overall accuracy Decisions routinely made using this data as a base 0% accuracy!

AUDIT PLAN & REPORTING TAKES TOO LONG, TOO MUCH EFFORT


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Creation of Spring project update (intranet article)

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DM

ADM ADM EA

Project DG

Project DG EA

Project Director

Project Liaison

Project Manager

Comms.Liaison

DG Comms CIO CFO

CHRO COO

DM EA

Subject Matter Expert





Article approved

Article posted

on Intranet

FallTwo-page intranet article

Handoffs 97Lead Time 9 monthsEffort Time >100 hoursOrganizational Learning

?

Issues in document creation

work

42

Many reviewloops

Too much work in

progress

Unclear voice of client

Preventable work / 8 Lean

wastes

Waterfall Development

Workflow is invisible

SUMMARYLean for Internal Audit

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Summary

1. Not a project a business approach and tools, create habits

2. Applies equally to your clients work as well as IA work

3. Makes Internal Auditors more effective and delivers better results to clients

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Lean Internal Audit Yellow Belt Training

Ottawa, Feb. 22-24, 2016To register:

[email protected] or leanagility.com

Craig [email protected]

(613) 266 4653

Paul [email protected]

(819) 598 1426

45

mailto:[email protected]

Lean for Internal AuditOverviewSlide Number 2The ChallengeSlide Number 4Retirements ReviewImprovement plan over three weeksSlide Number 6Slide Number 7What is Lean?Slide Number 9Elapsed Time: 90+ % non-value addedFlowHow backlogs often developThe classic eight lean wastesDefectsOverproductionWaitingNot fully utilizing peopleTransportInventoryMotionExcessive ProcessingTools: Value Stream MappingSustaining: Visual ManagementSustaining: Stand-Up MeetingsTypical Challenges to Implementing Lean Government Slide Number 27How does Lean apply to Internal Audit work?Specific Lean Issues in IAToo much work taken onToo much work is taken onTime YourselfTime YourselfSlide Number 34Audit plan not executed consistently inconsistent data needs rework or re-collection Poka Yoke Error ProofingSustaining: Stand-Up MeetingsRepeatability and Reproducibility Gage R&RGage R&R (contd)Audit plan & Reporting takes too long, too much effortCreation of Spring project update (intranet article)Issues in document creation workSummarySummarySlide Number 45