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Auditing Project Management Practices

TOPIC 1: INTRODUCTION TO PROJECT MANAGEMENT PRACTICES

Introduction

Recent statistics, published in a July 2020 article on saaslist.com, entitled, “The State of Project
Management” by Katherine Stone states that one in six projects have a cost overrun of 200 percent.
The article also reported that IT projects with a budget of at least $1 million (USD) are 50 percent
more likely to fail to meet business objectives. Additionally, the article stated that forty-one percent
of businesses with a high project failure rate blame a lack of involvement from executives —
including project sponsors — in the project management process. Finally, the article relayed that
project management challenges cost businesses $109 million (USD) for every billion dollars invested
in a project.

Internal Audit and Project Management

Wow! Those are some pretty staggering facts; but, how is that relevant to our work in internal audit?

Well, internal auditing is designed to add value and improve an organization’s operations, and these
statistics indicate that failed projects have large financial implications.

That could really impact the bottom line. What can internal audit do?

The study showed that projects lacking adequate support by the project sponsor and project
management office (PMO) account for nearly half of failed projects, and it is internal audit’s
responsibility to evaluate governance and control processes.

I guess internal auditors really need to know a lot about project management.

Learning Objectives

• Discuss the fundamentals of portfolio, program, and project management.

• Review the core principles of project management.

• Explore the controls and risks associated with project management.

• Recognize the internal audit roles in a project.

• Describe the basics of auditing projects.

Common Terminology

Control — Any action taken by management, the governing body, and other parties to manage risk
and increase the likelihood that established objectives and goals will be achieved. Management

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