What Does It Take to Be a Highly Successful CAE?

Greetings from Canada, where I am attending the second annual Canadian Conference in Quebec City. I am impressed with the energy and enthusiasm of the profession here, and the conference has been packed with informative and timely sessions that address the challenges and opportunities facing internal auditors. The conference will close with an afternoon Canadian Audit Leaders Forum, and I have been asked to deliver some remarks to open the event. Among other topics, I plan to highlight for the audience what I view as the characteristics of a highly successful 21st century chief audit executive (CAE).
 
Over the past few years, I have had the opportunity to partner with, and assess the internal audit operations of, dozens of extraordinarily talented CAEs. A couple of years ago, one of my clients (a Fortune 500 company in the transportation industry) was preparing to undertake a search for a new CAE. The CEO asked me what attributes he should be looking for in this important executive role. I gave it some thought and decided to conduct my own informal research before giving an answer. My objective was to identify the proverbial “seven characteristics of highly successful CAEs” that I could provide to the CEO as this search was about to take place. In the ensuing days, I went back through the results of a myriad of quality assurance assessments of high-performing internal audit functions and identified a list of 10 departments that I felt were the absolute best I had seen. In every instance, they were being led by extraordinary CAEs. Next, I inventoried the traits of these CAEs to identify which characteristics they shared. The following are the seven traits that I shared with the CEO preparing to undertake his search.
  1. Executive presence. The CAE can function comfortably in the “C Suite” and is viewed as a “peer” by other members of the corporate executive leadership team. The audit committee will typically see the CAE’s executive skills on par with others who come before it.
  2. Strategic thinker. Highly successful CAEs are not focused solely on preparing and delivering next year’s audit plan. Instead, they have their audit function looking ahead to ensure capabilities will align with stakeholder and corporate needs three to five years in the future. 
  3. Risk centric. The CAE has a keen understanding of risk management and how the audit function should align coverage to address the most significant risks facing the enterprise. Maintaining a cyclical audit plan is easy, but successful CAEs understand its ultimate limitations. 
  4. Innovative. One of the most pervasive traits of highly successful CAEs is their commitment to excellence through innovation. In addition to leveraging technology, they are constantly challenging their organizations to enhance processes and services.
  5. Objective. A fundamental attribute of professional auditors is objectivity. In no one is it more critical that objectivity be demonstrated than the CAE. Others within the enterprise must believe the CAE is fair and unbiased in directing the work and outcomes of the internal audit activity. Highly successful CAEs are almost always described by their peers as “fair” and objective.
  6. Strong communicator. The ability to communicate meaningfully and impactfully with key stakeholders is vital to the success of any CAE. Highly successful CAEs have strong communication abilities as part of their DNA.
  7. Courageous. CAEs must possess the courage to “call it like it is.” Highly successful CAEs instinctively know the right thing to do when faced with a dilemma. More importantly, they set a tone in their internal audit functions so that everyone draws on their courage and objectivity.
I realize that my list is unscientific, and somewhat subjective. If you have other attributes that you believe should be emphasized, I would encourage you to share them here and with others.            

Posted on Sep 23, 2009 by Richard Chambers

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  1. Very good article.

  1. Excellent conference in Quebec City and enjoyed your insights on Highly Successful CAEs.  Only trait I would add to your list is something I was told by a CEO I reported into over a number of years at a previous compnay.  He saw a key trait as "develop people"  Here he did not mean the internal auditors but development of the entrie 6000 employee population base.  Through audits and other means the audit process should raise the integrity of all your human resources thereby making the company stronger.  Besides audits this can be achieved by rotating auditors out of audit into the business, by being responsive to management queries, by being out in the field and interacting regularily with operating personnel.  If a CAE has the skil to develop people this will have a long term positive impact on the organization.

  1. All traits you have mentioned are so grate, one thing I would like to count it in, that is  a Problem solver and crtical thinker, as we know the internal auditing faces alot of matters that concerned the company and need to be solved from the roots. 

    In my opinion that could give  the internal audit a vital role in consulting.

      

  1. I agree with all of the traits listed above, and would add "Thick-Skinned"  to the list.  Similar to "Courageous," a CAE will often be put in situations where others will feel the need to attack him or her personnally, as well as attacking the IA Department generally.  How those attacks are handled will set the tone for both those within the department, and those outside.

    On another note Mr. Chambers, I am conducting a brief research study on improving the effectiveness of the SOX legislation.  If you wouldn't mind participating (it shouldn't take more than 10 minutes of your time), please contact me the email listed in this reply for more details.  Thanks.

  1. A CAE must also have Integrity.  I have seen many executives with the above attributes.  However, without Integrity, other qualities are worthless and even damaging to the enterprise and its human capital.

  1. the CAE should follow, commit and comunicate to all ethical value, i heard about some CAE whom they used there authority wrongly in away create mistrust in audit functions 
     

  1. Let me  add a few more uncoventional requirements for a CAE

    1. Wisdom : 

    While it cannot be measured, the lack of  it can certainly be a risk for the organization as a whole

    2. Pragmatic

    As seen in most situations, the requirement is often to act based on conflicting issues and hence ability to sort out the priorities based on available evidence can be invaluable

    3. Resignation

    To accept that which one cannot change may not be a great quality one would prescribe but anyone who cannot accept reality is obviously a risk to the organization

     

  1. Thanks for the story about your experience with a Fortune company. It is of great interest. I believe everybody wants to know how they work to achieve such success.
  1. This is nice article, i really impressed by read this article. thanks for sharing

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