State Farm Internal Audit: Journey to Agile October 28, 2019 Katie Monzon, State Farm – Internal Audit Seth Hale, State Farm – Internal Audit Views represented are those of the presenters and not necessarily State Farm.
1 Agile Adoption 2 Internal Audit Agile Framework 3 Scaling Agile 4 Agile Maturity and Early Learnings
1 Agile Adoption 2 Internal Audit Agile Framework 3 Scaling Agile 4 Agile Maturity and Early Learnings
Why Agile? CONTENTS Continuously improve and adapt to deliver valued assurance to stakeholders in a rapidly PART ONE changing risk and control environment PART TWO Increase capacity and throughput by executing enhanced and refined PART THREE work processes PART FOUR Deliver value quickly with flexibility, iterative enhancement, collaboration, and a strong focus on empowering people
Traditional Auditing Challenges CONTENTS 1. Manual Approach ▪ Not using full use of technology to access, monitor and audit 4. Reactionary ▪ Lack of analytics supporting the process PART ONE ▪ React as issues arise in the enterprise ▪ IT not embedded in the audit teams to identify ▪ Lack flexibility to meet business needs and implement data-driven approaches ▪ No means to visibly and effectively PART TWO 2. Redundant Testing/Auditing reprioritize work ▪ Multiple teams are working on the same thing ▪ No central visibility into what everyone is PART THREE 5. Fragmented Alignment doing ▪ Need to improve alignment with partners 3. Process Driven in the business PART FOUR ▪ Too focused on the documented steps ▪ Testing team model extends the process ▪ Process is used to track accountability as and increases the number of hand-offs opposed to giving teams freedom to execute ▪ Focus on areas for a “burst of time” ▪ Completing hours of work that are not being accounted for as coverage
Anticipated Agile Benefits CONTENTS Increased Visibility and Efficiency Alignment Increased transparency will allow the audit PART ONE Audit more efficiently leading to more team to better serve the consumer. audit coverage , greater focus on higher risk and reduced hours per audit. Improved efficiency and team cohesion by PART TWO moving work to people, not people to work. Internal Audit PART THREE Speed for Highest Priority Items Knowledge to Audit Selectively Visualize and prioritize the work. Eliminate the redundancies that exist PART FOUR across teams. Allow the auditors to do No waste in the audit process. Being the work opposed to getting tied up in flexible and auditing the highest priority the processes items will result in more work being able to go through the pipeline.
What is Agile? CONTENTS Agile is a collection of practices, based on a set of principles, derived PART ONE from a set of values that help drive changes in behavior and culture. Work is completed Deliver value PART TWO with more quickly with Shift traditional flexibility, but still flexibility, roles and Persistent teams of PART THREE with consistency; continuous responsibilities in a people deliver work everyone adheres improvement, more iterative, in shorter, iterative to a basic set of collaboration and a incremental and cycles. PART FOUR principles and strong focus on evolutionary way. values. people.
Agile Values CONTENTS Empowerment & Continuous Customer Focus Deliver Results Transparency Accountability Improvement PART ONE The relentless Demonstrate Produce Create alignment Embrace change pursuit of trust by measurable and effective through outcomes that empowering outcomes and prioritization continuous PART TWO produce value for teams and results with pace, through improvement by the customer. leveraging their on both an transparency of listening, diverse talents. individual and purpose, work, innovating Promote team level. and performance. learning, PART THREE accountability iteration, and through adjusting. ownership of PART FOUR work.
Agile Principles CONTENTS Customer & Team Member Iterative and “Fast Fail” Stakeholder Adaptability Focus incremental Philosophy Focus Gathering input Enabling self- Producing early, Driving learning Allowing squad PART ONE throughout the organization and workable through doing. members to development of autonomy, and deliverables. Allowing adapt and the work supporting Transparency, deliverable change at any PART TWO product or judgment-based inspection and development to step. Learn, service on a decision-making. adaption, stop if the bend and break predictable Leadership will creates a shorter customer does the rules. Having timeline or set the vision, feedback loop not perceive the flexibility to PART THREE iteration prioritize the and reduces risk value in an early shift to the schedule. work, and then while executing iteration. Test highest-priority empower the the work. and learn work. team to execute. mentality. PART FOUR
Agile Principles CONTENTS Rigor/Discipline/ Learned Optimizing Flow Coaching Equal Voice Practice Helplessness The importance Execution of Coaching in agile Demonstrate Listening and PART ONE of Work in common consists of self-awareness, observing skills, Progress. Stop working professional avoid “legal knowledge and starting and practices, and coaching, cheating ”. Being expertise PART TWO start finishing. exercising facilitation, the leader that amongst the Targeted focus freedom within mentoring and goes first, team. Embrace on progressing the frame. teaching. vulnerability and consider all the work based Having rigor and Coaching fosters personal perspectives. PART THREE on prioritization, predictability, focuses on and team Key contributor avoids the with a focus on lean/agile, growth. to high bottleneck honoring technical, Stopping things performing agile effect. commitments. business and is just important teams. PART FOUR transformation. as starting.
Agile Practices CONTENTS Empowerment Customer Continuous & Deliver Results Transparency Focus Improvement Accountability PART ONE Iteration Iteration Backlog Self-organized Backlog PART TWO Planning & Planning & Prioritization Teams Prioritization Prioritization Prioritization PART THREE Iteration Empowered Definition of Stand-ups Iterative Work Planning Teams Done PART FOUR Minimum Showcases Social Contract Viable Product Wall of Work Retrospective (MVP)
Agile Ceremonies CONTENTS Showcase (1 hr) Daily Standup (15 min) 2 4 • Share team’s sprint accomplishments • What did you accomplish yesterday? to stakeholders • What will you accomplish today? • Collect feedback from stakeholders • What is blocking your progress? PART ONE Start of Sprint End of Sprint Week 1 Week 2 WED THU FRI MON TUE WED THU FRI MON TUE PART TWO Sprint Planning (2 hr) Backlog Refinement (1 hr) • 1 Review feedback from stakeholders and • Forecast sprint capacity based on recent velocity update Product Backlog with user stories • 3 Pull priority stories from the product backlog PART THREE • Review and update sizing on user stories matching expected capacity • • Ensure upcoming stories meet the Confirm story outcome details “Definition of Ready” • 5 Confirm story acceptance criteria • Prioritize Product Backlog • Confirm story point estimates PART FOUR • Create tasks for each story Retrospective (30 mins) • Review stories with product owner • Reflect on what happened in the sprint • Identify opportunities for improvement • Commit to actions for improvement in future sprints
1 Agile Adoption 2 Internal Audit Agile Framework 3 Scaling Agile 4 Agile Maturity and Early Learnings
Agile Changes CONTENTS New Ways of Working Change in Mindset Persistent Teams PART ONE PART TWO Focus on flexibility, Small, cross- Iterations and their PART THREE adaptability, functional, engaged, ceremonies provide ownership, and self-empowered a predictable initiative to support teams with the cadence for teams to PART FOUR an agile working ability to prioritize produce incremental environment and execute their value backlog of work
Design Principles CONTENTS Inclusive Location Approach • At most, 2 to 3 locations should make up a squad. At least 2 people from each location represented will be included. PART ONE Cross-functionality PART TWO • Squads should be comprised of individuals with different functional experience and skills in order to deliver a customer outcome from end-to-end. PART THREE Dedicated & Persistent Squads • Squads are long-lived and adapt to new types of work without existing squads being PART FOUR disbanded and new squads being created. Annual planning process will include looking at groupings of work/auditable units to ensure principles are still met. Squad Size • 5 – 9 Squad Members
Internal Audit Agile Framework CONTENTS IIA Standards OCC Handbook on Internal and PART ONE Leadership Requirements External Audits PART TWO “Freedom within the Frame” to execute the PART THREE Audit Process PART FOUR Federal Reserve Supervisory Letter SR 13-1
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