When I did my audit training we were introduced to the concept of CAKE, that is cumulative audit knowledge and experience. Now this was being taught to me as part of planning and delivering an external, financial statements, audit. At the time I scoffed at the concept, surely audit is a process that sits above things like that? It is an absolute process that always would get the right answer no matter how much cake was available. Also, isn’t cake just another way of capturing bias and opinion?
Well, I’m a little older and perhaps even a little wiser. I now see how critical cake is, though I’m not sure in the way that the trainers at the time would have envisaged. First I think the cake they referred to was technical and business cake. That is, the experience of a particular client’s business, the accounting judgements and decisions they had made and how they would address accounting judgements and decisions in the future. I’m afraid I now see cake in a more substantial and comprehensive way. It is the knowledge of the real organisation, its culture, its senior people, movers and shakers. The way its business model works, is perceived to work, and challenges to it. Also who to go to to get things done or find out about specific issues.
As an internal auditor I think cake comes into its own. Not only can substantial cake be developed within a team, with the right processes of open sharing in the team this cake can be gathered and updated constantly. Now the issue here is to avoid group think, but done right, the audit team can have a constantly evolving and holistic view of their client organisation. This comes down to things like that spat between finance and estates, the new agreement for X to support Y, the knowledge that senior person Z does not like and will not work with A. These can be invaluable for an auditor wanting to assess real risk.
As a CAE it can also prove invaluable in getting audits done. Not only should a good CAE have a good sense of the result of an audit before it is even scoped, driven largely by cake, but this cake should raise their antennae to findings and areas to look for during the audit. Cake also supports the process of releasing reports. I always want my audit reports to be successful, by that I mean that needed changed is facilitated and supported, or a job well done through good work and governance is recognised and supported, or an area that needs attention is given it through the spotlight of an audit report. To do this effectively it often means releasing a report in the right order. By this I mean that the report makes it way through layers of staff, normally junior to senior, so that lower levels of staff do not feel stitched up with their boss, and senior staff are not kept ill informed and surprised by an audit report. This takes social skill and a real knowledge of the right way to do things. I still, even now, struggle always to get this right, but knowing the organisation, cake, makes a huge difference.
The other time cake comes up is when you get new or lose current staff. I used to feel hurt when staff left, as it always felt like staff were abandoning me and breaking my trust. With the perspective of age and experience I see that staff all wish to develop their own careers and paths and that, sometimes, you cannot always provide that. It does remove cake though. Now this is only a problem if they’ve never shared their cake with the team (in which case have you lost much?) or if they’ve not had time to share all of their cake. The plus side is that a new team member will bring new cake from somewhere else. They will add their distinctive ingredients to enhance and develop your audit cake.
So whilst in life you may rarely get to have your cake and eat it, I do think all CAEs should take this process of sharing it more seriously. I would always embed this into the regular meetings and report opinion forming processes you and your teams have. How is your baking?