Change Is Hard

Change is Hard

2012-04-12

"Isn�t internal audit�s primary responsibility to ensure that regulatory and policy compliance controls are tight?" I disagree. The role of IA is to evaluate whether management has designed a system of control (governance, risk assessment, COSO type control framework) that propvides a reasonable comfort level that compliance occurs, and when it doesn't, that the deviations will surface and be corrected before they become persistant or pervasive. "How can Charlie be sure that management isn�t just leading him in a direction that would bring back the old days of lax controls and ineffective audits?" By (a) assuring a close working relationship with the audit committee chair; (b) adhering to the IPPF; (c) applying a strategic risk approach to audit department annual planning and a tactical risk approach to individuial projects; (d) using a recognized control framework such as COSO's as the criteria for assessing the state of strategic and tactical control. "Maybe he should never have asked the stakeholders what they thought in the first place; after all, he does need to maintain his independence." Nonsense. Independence is structural. If the CAE is accountable solely to the CEO and the audit committe chair, the requisite independence exists. If so, and thus assuming those being consulted aren't in a positon to "give orders" to the CAE, Objectivity is the key concern. The necessary objectivity (a state of mind)comes from knowing the industry, understanding the risks, following the IPPF, consulting multiple informed sources, etc. I strongly disagree with other posters who have suggested the role of IA is to find fraud, waste, abuse. Those are are all the responsibilities of management. The philosophy of the practice of internal auditing is delineated clearly in the IPPF. IA has a corporate governance role - we are evaluators of how well management has exercised and been held accountable for minimizing the risks of fraud, waste, abuse. IN the event fraud is suspected, I would posit that most internal auditors are not trained to conduct investigations, which is why the IPPF focuses on internal auditors' awareness of the red flags of fraud. "Cost savings" are the result of effective management. To suggest that identification of cost savings is a primary IA responsibilty is, in my opinion, an egregious misrepresentation of our corporate governance role, responsiblity and accountability.

A Balanced Approach

2012-02-14

Internal Audit's enterprise-wide perspective operations, risks, and controls positions it to deliver incredible value to the company. IA would be doing the company a disservice if it did not use its comprehensive knowledge and talents to provide operational insights. Providing consultative services does not necessitate a decreased focused on assurance activities if the appropriate parameters are established. In fact, when a balanced approach is taken, the assurance role of IA is typically made more effective. There are plenty of case studies available that would prove this out but what seems to be most at work in your staff is what John Kotter referred to in his book "Good to Great". He specifically states that being satisfied with good is the biggest stumbling block to becoming great. The IA staff is proud of what has been accomplished and they have reason to be proud. Your challenge is to motivate them to want greatness. They seem to have a lot to lose and seemingly have little to gain. That picture has to change if they are going to really. They need to see what they are truly losing right now. They need to understand what their satisfaction with the status quo is costing the company. Only then can they start to envision what could be.

IA Evolution

2011-12-02

I agree with what Liji has said. If your goal as an internal audit shop is to truly add value, then you must adapt to changes in the business. The most mature, effective audit shops align their goals with the goals of the business, while still performing necessary assurance functions. From a team perspective, in this situation, Charlie should, as the leader of the group, establish that as part of the department culture. If necessary change results in turnover, embrace it, and revamp the department with those that accept and welcome change/evolution.

Consultative Roles = Organizational Change

2011-12-01

I have found that the most change is effected when the auditor includes the consultative role in each audit. There is no reason why we cannot also offer business advice while enlightening our clients about the risks they are taking. It may be easiest to just report what the client is not doing in relation to policies & procedures, but real gain is acheived when we roll up our sleeves, sit next to our clients and brainstorm/coach them on potential improvements. The era of internal auditors as "police" has long passed it's relevance and usefulness.

IA Must Evolve or Die

2011-12-01

As with most institutions in a fast changing business environment, Internal Audit must evolve or increasingly become insignificant. While assurance on compliance and regulatory controls remains important, the best of Audit shops will also provide thought leadership to drive the organization forward. This thought leadership is made possible by Internal Audit's bird's eye view into a company and should be focused on operational efficiencies and cost savings. Such an approach will also enable Interal Auditors to be a great source of management talent to the rest of the organization. Evolution of Internal Audit is a win win on all fronts.

Change is Hard

2011-12-01

Dennis: There is a related article on this issue here under "Raising the Internal Audit's Potential" that answers this question. As the economy is nose diving internal audit ought to make a change by adding value to the organization they work for by suggesting ways to save costs on waste, fraud, abuse and operational inefficiency (They come under "Operations" Audit) and by acting as "Internal Consultants" without losing their independence. Just performing assurance services won't cut it any more. Every audit should reflect clearly the dollars saved or identified to the Audit Committee and seek opportunities for such audits. http://www.theiia.org/intAuditor/feature-articles/2011/december/raising-internal-audits-potential/