IN THIS ISSUE
According to Mike
Self-assessment: Confronting the Good, the Bad, and the Ugly
MICHAEL PIDZAMECKY, CFE, CMA
In the May issue of CSA Sentinel, I said I was retiring my column. Okay, I'll take the high road and admit I was wrong. Well, somewhat wrong anyway, because my new plan is to write about the all-encompassing world of self-assessment rather than specifically focusing on control self-assessment. To me, self-assessment encompasses all the auditing approaches that require management and staff to perform an assessment with or without audit assistance in a particular area. So, I guess you can say I'm back from a very short retirement.
In previous columns, I've tried to promote how to implement a self-assessment program, the pros and cons of certain approaches, and the proponents and hurdles you may face along the way. Unfortunately, I don't think I've been able to articulate the reason why self-assessment should be done. A recent personal event, however, seems to have helped me discover the answer.
Based on my observations and experiences, if I examined the evolution of self-assessment programs during the last 20 years, one element stands out as their cornerstone: communication. This fundamental element is based on open, articulate, and intelligent dialogue about what is happening in the organization's life — good, bad, or indifferent. This element sounds simple, but it's not. As Winston Churchill once said, "Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened." The sad reality is that people generally do not want to hear the truth about problems or concerns in their life or workplace. For instance, how many of you — especially the internal auditors out there — have delivered a report from a well-planned, well-executed review that shocked or even angered an organization's management? The reality isn't that management is shocked or angry about your findings, but rather about you actually reporting them. Many times, I have found myself facing negotiations to remove a valid finding from a report so that others higher up or outside the organization would not find out. Why? Because in both business and life, we tend to think bad news only leads to bad things.
The situation can be likened to discovering you have cancer. When you are told you have cancer, you are shocked at first and then become distraught. You then proceed to denying it's happening, but finally accept the situation because there often is good news — it can be beaten if you take positive action. But why do we still go through these emotions when this disease is in many cases highly treatable, thanks to early detection methods and new drugs? Because, like I stated above, it is just like what happens in an organization. People often think that by ignoring bad things, they'll go away. Well, this is the wrong mindset for both the cancer that can afflict an individual and the cancer that can afflict an organization. If our self-assessment programs are to work, if we are to ensure that another Enron-type scandal does not happen, and if we are to ensure that our organizations are running efficiently and effectively, we must talk about and confront the good, the bad, and the ugly. Each person — no matter his or her level in an organization — should have the obligation and right to discuss what is or is not working in a thoughtful, intelligent, and supportive forum.
Self-assessment programs, fully supported by management, are the powerful medication that can cure the aliments of almost any organization. Once we share our knowledge and accept what is happening, we can start the healing process to make our processes, systems, and organization grow stronger and healthier so that they will be around for many more years to come.
Michael Pidzamecky, CFE, CMA, is a private consultant who works with CSA and ERM processes. Pidzamecky has developed several self-assessment approaches, presented sessions for IIA courses and conferences, and written questions for the certification in the control self-assessment exam.