Sometimes You Can Be Right or You Can Be Liked

Richard Chambers, CIA, CGAP, CCSA, CRMA, shares his personal reflections and insights on the internal audit profession.

 

I often post my thoughts on Twitter (@RFChambers). Most of the time, my Tweets receive few comments, but last week I heard from a surprising number of auditors after simply posting the thought: “Remember internal auditors: Sometimes you can be right or you can be liked — but you can't be both!”

I immediately received responses from two different groups. Some said they agreed, stating that internal auditors were the traditional bearers of bad news and that this inevitably leads to acrimonious relationships. Others said they disagreed, stating that auditors with good interpersonal skills could find friends in any business environment.

I think both groups may have missed the point.

The key thought behind my statement was that sometimes it may be impossible to be both right and liked at the same time. It may not be common, but there will be times during even the most successful career when internal auditors face disagreement.

When our audits reveal gross inefficiencies or even fraud, we have to be prepared for push-back no matter how fairly the information is presented in our reports. When we issue “graded” audit reports, a few customers will always fight for a higher score any time their grade is less than perfect.

It’s simply a part of human nature: Behavioral psychologists often say that when bad news is received, our natural reactions are first anger and then denial. We have to keep in mind that the occasional client who argues about every critical comment in an audit report may be justified — or he or she may once have been the over-competitive school kid who used to complain to the teacher any time his or her homework received less than an “A.”

We all know that we will face push-back eventually and that at times it might be accompanied by visible anger. When this happens, it might indicate that our findings are incorrect or that we have presented them unfairly. It also might simply indicate that our customer needs a little time to cool off. In the long run, the important thing is not that the disagreement occurred; it’s how we respond to the situation.

When the push-back occurs, we need to listen to our clients and ensure we have presented the situation fairly — but to present the situation fairly, we must resist the temptation to sugar-coat the facts or bury the news in vague terms. Our reputations as auditors depend upon our ability to present the situation in a balanced way that neither over-exaggerates nor understates risks and possible consequences.

When Cynthia Cooper and her internal audit team first started uncovering corruption at WorldCom, they faced serious disagreement (and even ominous threats) from management. The team eventually resorted to working secretly at night in order to finish their investigation. I truly believe this was a situation in which the auditors could either be right or they could be liked, but they could not be both.

One day soon, you may be facing a situation where you can’t both be right and be liked. After determining that this truly is the situation, there is only one ethical choice open to an internal auditor: Choosing to be right. Over time, I believe we can win more respect and, in particular, win more respect from the right people by simply doing the right thing.
 

 

Posted on Sep 25, 2012 by Richard Chambers

Share This Article:    

  1. Dear Richard, I think your article is spot on and I do concur. In my view, it would be worth examining situations of conflict and discomfort as such situations, say "moments of truth", might be a very rich source to better understand the essence of internal auditing. Best regards, Rainer

  1. Richard:


    I think this is a very important topic.  Whether you are promoting radical change or delivering opinions that have the potential to negatively impact the other party there will always be "risks". 

    To reduce conflicts with clients I think IA needs to get out of the business of providing subjective opinions on "control effectiveness" ASAP and focus on whether there is balanced disclosure by the client or in the auditors direct report assessment of the current residual risk status,  including potential impacts of risks being accepted should they materialize.  The focus of debate with management is then on the accuracy/balance of the risk assessment not arguing about whether IA's subjective opinion on control effectiveness does, or does not truly reflect the organization's risk appetite/tolerance.

    I have been guided by a simple principle over the past 25 years which has proven remarkably resilient -  management/work teams can accept any level of residual/retained risk that they are prepared to share candidly with senior management and the board. It shouldn't IA's job to report whether they like/agree with the residual risk acceptance/risk appetite/tolerance of management/work teams.  It should be IA's job to ensure the board is fully aware of management's risk appetite/tolerance.

    This will take a major shift in the current IA pardigm in a large percentage of organizations in the world.  In my opinion the IIA needs to champion that shift through training and IPPF.  The CRMA designation and the new CRMA exam sylabus issued this month is a great start.

  1. Richards,

    Very good point. And we will have train ours auditors to face this situation during all carrer.

    Best regards.

    Renato Trisciuzzi

     

  1. I think before even presenting a finding, an auditor must make sure that it's fully supported with evidence.  Not only that, the auditor should discuss the issue with his/her team members and also management. 

    I think if you show the client your findings and include a few supporting points to back it up, then they may be more receptive to the finding.  It will lead to value-added recommendations that manaement can choose to implement. 

    Also, it's a conversation with the client about the findings.  So, auditors have to be careful how they communicate and not sound like they are accusing their clients. 

  1. I truly agree with Mr. Richard's comments.

    I have  faced such situation from the Managers in whose department I had uncovered frauds. But as rightly said by Mr. Richards in the long run the very same manager respects you much more than the push back we received from him during our audit report presentation.

    Regards,Kapil Sharma , Mumbai , India.

Leave a Reply