All Things Internal Audit: Human Capital Risk: What Every Auditor Should Know

00:00:02 The IIA

The Institute of Internal Auditors presents All Things Internal Audit.

00:00:07 The IIA

In this episode, Mike Jacca and Yvette Adams talk about one of the most important and often overlooked risk areas, human capital management.

00:00:16 The IIA

From talent shortages and upscaling to culture, fraud, and AI, they unpack how people strategy connects directly to organizational success.

00:00:26 The IIA

Hear how internal auditors can assess workforce risks,

00:00:29 The IIA

build better relationships with HR, and ensure that governance around both people and technology keeps pace with change.

00:00:39 Mike Jacka

Welcome, Yvette.

00:00:41 Yvette Adams

Thank you so much.

00:00:41 Yvette Adams

I'm happy to be here.

00:00:43 Mike Jacka

Let's start with a nice, simple one.

00:00:44 Mike Jacka

What is human capital management to you, and why is it so critical to the organization?

00:00:48 Yvette Adams

It's about people.

00:00:50 Yvette Adams

But the term human capital management is just a fancy way of saying it's how an organization takes care of its people.

00:00:57 Yvette Adams

So it can cover anything from hiring to training, to keeping people engaged, to helping them grow and progress in their careers.

00:01:06 Yvette Adams

But the reason why it's important is it's not so much about HR anymore.

00:01:12 Yvette Adams

It's about how people impact strategy.

00:01:16 Yvette Adams

And it's important for an organization to keep that in mind when they're talking about their people and how they're using their people and their companies.

00:01:26 Yvette Adams

So, it's interesting when I was doing some research here, I saw that the IIA's risk and focus report puts human capital risk right up there with cybersecurity and business continuity as one of the top global risks with things like talent shortages, hybrid work, changing expectations.

00:01:45 Yvette Adams

how we manage our people has become make or break for companies.

00:01:50 Mike Jacka

And I think that's a great point.

00:01:51 Mike Jacka

I mean, human capital, capital management, it's not just an internal audit.

00:01:56 Mike Jacka

You see from every walk of life, every C-suite person, they know people are the important things, but you made two points in there that I just really love, one of which is it's not just HR.

00:02:06 Mike Jacka

That became kind of, I mean, I remember the good old days when we called them personnel, and then it became HR.

00:02:12 Mike Jacka

And so

00:02:13 Mike Jacka

For an organization to look at capital management, they have to look beyond that and how it's all working.

00:02:18 Mike Jacka

And the other point you made that I really like is it's taking care of people.

00:02:23 Mike Jacka

And so, often.

00:02:25 Mike Jacka

It's very easy to fall into the trap of numbers and people, and you forget you're trying to take care of the ones.

00:02:31 Mike Jacka

You're trying to take care of the ones coming in.

00:02:33 Mike Jacka

You're trying to take care of the ones that you already have.

00:02:36 Mike Jacka

So you kind of hit this a little bit, but let's talk in terms of what are the big risks, and in particular, what are the workforce issues that can really impact the organization's ability to achieve what it wants to get done.

00:02:49 Yvette Adams

So some of the major risks would be losing top talent and having skill gaps.

00:02:55 Yvette Adams

But beyond that, it can go a little bit deeper.

00:02:58 Yvette Adams

It can include things like operational breakdowns.

00:03:01 Yvette Adams

You could have reputational risk.

00:03:03 Yvette Adams

You could even have compliance risks.

00:03:05 Yvette Adams

So for example, your company might have a strategy that they're trying to execute on, and they have an initiative they're going after.

00:03:13 Yvette Adams

Well, if they don't

00:03:15 Yvette Adams

either upskill their people or hire the right people with those skills.

00:03:20 Yvette Adams

It can actually tank the initiative.

00:03:24 Yvette Adams

And then also people become frustrated in what they're doing.

00:03:27 Yvette Adams

They can become unproductive.

00:03:30 Yvette Adams

And then it opens an opportunity for fraud risk, execution risk, and getting things right for the operations.

00:03:37 Yvette Adams

So it goes deeper even than just, you know, having the right skill set.

00:03:41 Mike Jacka

One of the first, you used a phrase I love, and it's kind of a buzzword, but nonetheless, it's a fantastic word.

00:03:46 Mike Jacka

And that's upskill.

00:03:48 Mike Jacka

What I saw just in an internal audit, finding the time, opportunity, and resources to upskill our internal auditors to get the work done was a challenge.

00:03:59 Mike Jacka

And of course, now we can, you know, throw around fancy buzzwords like AI and everything else.

00:04:04 Mike Jacka

You know, how do we keep up on it?

00:04:06 Mike Jacka

It's all about upskilling and finding the time.

00:04:07 Mike Jacka

And I would think that is an issue for organizations to find

00:04:11 Mike Jacka

Okay, we've got some great people.

00:04:13 Mike Jacka

How do we upskill them?

00:04:14 Mike Jacka

What do we do?

00:04:16 Yvette Adams

Well, I'll start from the way I work with upskilling with my team.

00:04:21 Yvette Adams

It's not a, I have a one time a year event where I'm going to focus on upskill.

00:04:27 Yvette Adams

It's actually part of our day-to-day, our week to week, our month to month, whatever that looks like.

00:04:34 Yvette Adams

So for my team,

00:04:36 Yvette Adams

I actually will bring things to them in our daily stand-up meetings, just little nuggets of how we can use something differently, or an idea that came to mind.

00:04:46 Yvette Adams

Because those little...

00:04:48 Yvette Adams

opportunities to highlight something that they can lean into and maybe research a little bit more and start to use on an incremental basis, in my opinion, is more impactful than a one-day seminar once a year or whatever that looks like.

00:05:02 Yvette Adams

I think for the rest of the organization, even outside of internal audit, then upskilling, you have to be aware of what your strategy is for your company.

00:05:11 Yvette Adams

Where do you want your company to go?

00:05:13 Yvette Adams

And

00:05:14 Yvette Adams

because of that, what type of skills are these people going to need in order to do that?

00:05:19 Yvette Adams

You can hire people with those skills, but in my opinion, it's a lot more beneficial to leverage the people that we have.

00:05:28 Yvette Adams

We know what kind of work they do.

00:05:29 Yvette Adams

We know we can rely on the work they do.

00:05:32 Yvette Adams

Let's make sure they have the skills to bring to the table.

00:05:34 Yvette Adams

And it's a win-win for both the employees and the company, because the company has people they know and trust.

00:05:41 Yvette Adams

And

00:05:41 Yvette Adams

the people that are working there have an opportunity to grow themselves, and it's a motivating thing for them.

00:05:49 Yvette Adams

It brings them job satisfaction.

00:05:51 Mike Jacka

I think more in terms of internal lot, but it's true organization-wide.

00:05:54 Mike Jacka

We have so much talent.

00:05:57 Mike Jacka

What are we doing to keep them?

00:05:58 Mike Jacka

You know, it's just like in sales.

00:06:00 Mike Jacka

It costs more to get a new customer than to keep the current one.

00:06:04 Mike Jacka

Well, the same thing is true.

00:06:06 Mike Jacka

I used to tell the people that worked for me, my job is to make you better,

00:06:10 Mike Jacka

My second job is to then keep you.

00:06:13 Mike Jacka

And if I can't keep you, I don't care.

00:06:14 Mike Jacka

I've still made you better, but I want to make an atmosphere and an opportunity for you to be that much better.

00:06:20 Mike Jacka

And so kind of going broader from what you said also, one, does internal audit know?

00:06:25 Mike Jacka

And 2, does the organization even know

00:06:28 Mike Jacka

what their strategy is when it comes to talent management.

00:06:31 Yvette Adams

From my experience, there's a lot of focus on making sure internal audit is aware of the company's strategy, because part of what we do is evaluate how's the rest of the organization doing in terms of that strategy.

00:06:46 Yvette Adams

So I think the internal audit is aware and we can be a key resource in order to evaluate

00:06:54 Yvette Adams

our managers, is the company getting the talent in order to help drive that strategy?

00:07:00 Yvette Adams

And then in terms of internal audit, yes, I do think that internal audit shops are aware of what their strategy needs to be in order to support the company.

00:07:10 Yvette Adams

I think that

00:07:11 Yvette Adams

our seat at the table in order to understand the company's strategy can also ensure that we bring in the talent that can audit those functions or that strategy.

00:07:23 Yvette Adams

So then we can keep our staffing assessment up to date in order to say, do we have the people with those skills that can support the company's strategy.

00:07:34 Mike Jacka

As I've traveled around and talked to people, the thing I see so often when it comes to this is 1,

00:07:39 Mike Jacka

organizations may not have really articulated their strategy, which there's an instant spot for internal audit to help.

00:07:45 Mike Jacka

Second, it may be that internal audit does not know what it is.

00:07:48 Mike Jacka

There's that issue.

00:07:49 Mike Jacka

And the third one, when internal audit departments put together their own strategies, how often do they have that included?

00:07:58 Mike Jacka

And I always think of a line I heard from somebody that I will misquote as I often do, but they said, you always look at what the top 10 things for an organization is.

00:08:06 Mike Jacka

And one of them they say is our number one priority is people.

00:08:09 Mike Jacka

And then it's #10 on the list.

00:08:12 Mike Jacka

So there's an obvious miscommunication going on there.

00:08:16 Yvette Adams

Yep.

00:08:17 Mike Jacka

Okay, so let's drill down into it because this is something when I worked with Farmers Insurance, we ran into, we were trying to get into HR and try to do things.

00:08:23 Mike Jacka

And it was amazing the first times we went in, the pushback we had that HR said, you can't see this stuff, it's secure.

00:08:32 Mike Jacka

We wormed our way in, but I was wondering how you see, what's the best way for a department to come into

00:08:39 Mike Jacka

HR specifically and human capital in general to get this work done.

00:08:43 Mike Jacka

How do you work your way in?

00:08:45 Yvette Adams

Honestly, it's about building relationships.

00:08:47 Yvette Adams

You can't do anything in the internal audit shop without building relationships.

00:08:53 Yvette Adams

Because when you build trusted relationships with people and they know that you're here to help them and they can trust that you are going to help them, then it makes a world of difference.

00:09:05 Yvette Adams

So I build relationships with my audit clients.

00:09:09 Yvette Adams

And then we're also supported by our internal audit charter.

00:09:12 Yvette Adams

We ensure here that our internal audit charter shows what we have the authority to be able to look at so that if we do have to rely and lean back on that, we can bring that to the table as needed.

00:09:25 Yvette Adams

So we make it clear that, hey, we are authorized by the company to see this information.

00:09:31 Yvette Adams

And at the end of the day, we want to help.

00:09:34 Yvette Adams

We want to help the organization with the large picture.

00:09:37 Mike Jacka

And I think audit departments that have this kind of trouble will have trouble everywhere because the number one thing for internal audit is about relationships.

00:09:44 Mike Jacka

And it's everywhere in the organization and every level.

00:09:47 Mike Jacka

It's from the CEO to the janitorial staff, having relationships with everyone so that they know they can trust you.

00:09:55 Mike Jacka

I like the idea of, okay, we have to have an audit charter.

00:10:00 Mike Jacka

I will say again, in our experience, we did our best to never fall back on that.

00:10:06 Yvette Adams

I totally agree.

00:10:07 Yvette Adams

To me, first do the relationship, if you have to, let's fall back on the charter.

00:10:12 Yvette Adams

But there are ways that you can build relationships with people.

00:10:17 Yvette Adams

One of the things, and I know it's not popular, and we've talked about a little bit at the beginning, hybrid is a thing, right?

00:10:23 Yvette Adams

But honestly,

00:10:24 Yvette Adams

Being in the halls with people, being on site with people is a natural way to be able to start to build relationships through even the water cooler talk, or I'm at the coffee machine and I'm having a discussion there.

00:10:41 Yvette Adams

And then being in person at meetings so that when the meeting ends, you can actually have just a casual dialogue with somebody.

00:10:49 Yvette Adams

And then for me, I set up regular touch base meetings with my audit clients so that I can have a conversation.

00:10:58 Yvette Adams

We can talk business, but that we can also build a connection on a personal level.

00:11:03 Mike Jacka

We won't go too far into that remote auditing thing because I got in trouble with a blog post I wrote a while ago.

00:11:10 Mike Jacka

But

00:11:11 Mike Jacka

The personal touch is so important.

00:11:12 Mike Jacka

I will align my wife taught me, and my wife is very smart, except when she decided to marry me.

00:11:17 Mike Jacka

But when I first started at Farmers Insurance, she started at Blue Cross at the same time, Blue Cross Blue Shield.

00:11:23 Mike Jacka

And she told me within the first week, I don't care who walks down the hall, I'll say hi.

00:11:27 Mike Jacka

If it's the CEO, I'll say hi.

00:11:29 Mike Jacka

And it's very amazing for, it's a great thing to teach new auditors to say, you can say hi to anybody.

00:11:35 Mike Jacka

You know, they may not talk to you, but they may.

00:11:37 Mike Jacka

And so that's a good thing.

00:11:39 Yvette Adams

Exactly.

00:11:40 Mike Jacka

I've gotten a little far afield here, but I mean, it's a key to the success of internal audit.

00:11:44 Mike Jacka

I know.

00:11:44 Mike Jacka

Exactly.

00:11:45 Mike Jacka

Let's get all the way back down to now human capital and really kind of into the weeds with the details.

00:11:51 Mike Jacka

But let's go with the frauds.

00:11:53 Mike Jacka

What are common frauds or big errors that you've seen happening when it comes to this type of thing?

00:11:58 Yvette Adams

First, there's ghost employees.

00:12:00 Yvette Adams

Ghost employees are fake employees that have been added to payroll.

00:12:04 Yvette Adams

So someone with access to the payroll system sets them up

00:12:08 Yvette Adams

and then money ends up going to a fraudulent account.

00:12:11 Yvette Adams

So what can internal audit do?

00:12:13 Yvette Adams

Cross-check payroll records to HR records, and then you can look for duplicate bank accounts, duplicate addresses, that kind of thing can reveal that kind of thing that's going on.

00:12:23 Yvette Adams

Payroll fraud.

00:12:25 Yvette Adams

So things like unauthorized pay changes, or you could have bonus manipulation.

00:12:30 Yvette Adams

So what we can do then is make sure that duties are properly segregated into approvals and people actually taking that work to the system.

00:12:39 Yvette Adams

You could have misclassification of workers.

00:12:42 Yvette Adams

Sometimes people are labeled as contractors or exempt employees because that helps them to avoid paying some benefits.

00:12:50 Yvette Adams

However, there's

00:12:51 Yvette Adams

regulatory rules around that.

00:12:53 Yvette Adams

And so internal audit should be comparing job roles and classifications to contracts and what the job expectations are and aligning that to how people are labeled either as exempt, non-exempt, or contractors.

00:13:07 Yvette Adams

You could have misuse of training budgets.

00:13:10 Yvette Adams

So funds might be spent on things that don't align with your business goals and strategies.

00:13:15 Yvette Adams

And so of course, we as internal auditors

00:13:17 Yvette Adams

can review expenses for any area that we're looking at, look at vendor contracts.

00:13:23 Yvette Adams

We might want to make sure the training actually supports workforce development.

00:13:28 Yvette Adams

And with any remote work, verifying identity and managing access is more important than ever, especially with artificial intelligence that we've talked a little bit about.

00:13:38 Yvette Adams

I've heard of deep fakes going all the way through the hiring process.

00:13:44 Yvette Adams

And that's a scary thing.

00:13:45 Mike Jacka

Wow.

00:13:47 Mike Jacka

That's amazing.

00:13:48 Mike Jacka

While we're talking AI, what else?

00:13:50 Mike Jacka

We're all still learning what it is and what it does.

00:13:53 Mike Jacka

I think we're still all making it up as we go along.

00:13:55 Mike Jacka

But any thoughts on how internal audit can be involved when it comes to AI and HR?

00:14:01 Yvette Adams

I think that people always have to remember that artificial intelligence needs to be supported by human intelligence.

00:14:10 Mike Jacka

Yeah.

00:14:11 Yvette Adams

You can't have an effective artificial intelligence unless you're applying your human intelligence on top of that.

00:14:17 Yvette Adams

And funny enough, I actually heard somebody say, well, that's why Microsoft called it copilot, because there's a pilot in the seat.

00:14:26 Yvette Adams

So we want to look at what is the governance around artificial intelligence in our company.

00:14:33 Yvette Adams

Do we have a standard?

00:14:35 Yvette Adams

Where is the human in the process and those kinds of things?

00:14:40 Mike Jacka

Because we talked about the frauds and those types of things.

00:14:43 Mike Jacka

And that's very, that is the kind of thing that auditors can grasp easily.

00:14:46 Mike Jacka

I mean, it's, my background was in accounting, so it's accounting type stuff.

00:14:50 Mike Jacka

But when you start getting the soft skills, let's take employee engagement.

00:14:53 Mike Jacka

Everybody knows that right now the numbers continue to be horrible when it comes to employee engagement.

00:14:58 Mike Jacka

How does audit get into doing things like engagement, ethics, culture, those kind of reviews?

00:15:04 Yvette Adams

So audit can play a really important role here.

00:15:07 Yvette Adams

We can take a look at the company's strategy in terms of ethics and how they are motivating their employees.

00:15:15 Yvette Adams

We can see even what companies have disclosed, what they say they're going to do in terms of DEI or ESG, some of those buzzwords.

00:15:24 Yvette Adams

So when the company says they're doing something, how is that playing out?

00:15:28 Yvette Adams

You can have conversations with people and interview employees.

00:15:33 Yvette Adams

Like you might have your

00:15:35 Yvette Adams

senior leadership who says one thing and thinks that things are going on this way for their company, but yet you might have a conversation and some dialogue with employees, everyday employees, and find something different.

00:15:48 Yvette Adams

And if there's a disconnect, we probably need to raise that.

00:15:52 Yvette Adams

So you can do it through conversations, interviews with senior executives versus employees.

00:15:59 Yvette Adams

Oft times, then companies will also do surveys with their employees.

00:16:04 Yvette Adams

We can

00:16:05 Yvette Adams

Look at those surveys and we can see, okay, are there any trends here?

00:16:10 Yvette Adams

How is the survey conducted?

00:16:11 Yvette Adams

How is it presented?

00:16:13 Yvette Adams

Is there vast silence?

00:16:14 Yvette Adams

Because if there's vast silence, maybe that's an indicator or something.

00:16:18 Yvette Adams

So start to think about what you're seeing and maybe what you're not seeing in some of those results.

00:16:24 Yvette Adams

And then you can also look at things like exit interviews.

00:16:29 Yvette Adams

When people are exiting the company, what is it they're saying on the way out the door?

00:16:33 Yvette Adams

If your company's not holding exit interviews, then we can certainly thought that as something that could be good in order to start to drive, hey, there are some things that need to be addressed here.

00:16:44 Yvette Adams

But yes, employee engagement, upskilling, what's the tone at the top when it comes to that?

00:16:50 Yvette Adams

And then is the company doing what their intent is?

00:16:55 Mike Jacka

Yeah.

00:16:55 Mike Jacka

Tone at the top and does the messaging match that and does the actions of those below match what the tone at the top claims it is saying?

00:17:02 Mike Jacka

Yep.

00:17:03 Mike Jacka

It's another one of those where I believe the relationships are a big part of it.

00:17:06 Mike Jacka

And we could say that about every single one.

00:17:08 Mike Jacka

The example I think of, I was doing training for a large company, large audit staff, and it was just the supervisors and managers and I had 50 people in there.

00:17:16 Mike Jacka

So you can imagine the size of the audit staff.

00:17:18 Mike Jacka

And just training them and talking to that audit staff, all of a sudden what boiled up is what the

00:17:25 Mike Jacka

Leadership of audit did not know the anger, the frustration.

00:17:29 Mike Jacka

There had been changes that made no sense.

00:17:31 Mike Jacka

So what was supposed to be 4 days of training on supervision turned into including one full day of this is what's wrong with what's going on.

00:17:43 Mike Jacka

So I mean, it was kind of a structured situation.

00:17:46 Mike Jacka

If internal audit is in a position to be doing training, for example, we used to do training on ethics,

00:17:52 Mike Jacka

That's where these conversations can come up and you start to feel it.

00:17:55 Mike Jacka

One other we had was for a while, we would visit every single claims office.

00:18:00 Mike Jacka

I think it was 50, 75 claims offices throughout the US.

00:18:04 Mike Jacka

We had a large group to do it.

00:18:05 Mike Jacka

The chief claims officer wanted to report on what the culture was in every one of those claims offices, because he couldn't tell throughout the country how it was.

00:18:14 Mike Jacka

Some were great, some weren't.

00:18:15 Mike Jacka

And it was so it was kind of a

00:18:17 Mike Jacka

Not a part of the report, but a part of the information we provided to give them that.

00:18:22 Mike Jacka

So that turned into that piece of it.

00:18:24 Yvette Adams

And I think it's fantastic when management really cares and they want to hear that, because they're the ones that are going to make change in their culture if they're willing to listen.

00:18:34 Mike Jacka

Debriefing of surveys can be an interesting challenge, because we were involved in some one time where the person doing the debriefing focused on one person who was complaining,

00:18:46 Mike Jacka

We knew the history and knew they were a complainer.

00:18:48 Mike Jacka

So not that they needed to be ignored, but it became so focused on that, it swayed and tilted the way everything went.

00:18:55 Mike Jacka

What do you think are going to be the big risks, the big issues, the things that we've got coming up in human capital coming up in the next two, 5, 10 year, well, 10 years, nobody knows what's going on.

00:19:06 Mike Jacka

The next two to five years.

00:19:08 Yvette Adams

Well, I do think that we have a need to upskill.

00:19:12 Yvette Adams

And it comes back to the technology side and the human side of these things.

00:19:16 Yvette Adams

tools.

00:19:17 Yvette Adams

So we need to be constantly focused on the fast-changing pace of technology and what we can do to keep up.

00:19:27 Yvette Adams

That means learning more about data ethics, artificial intelligence governance, models, how we can validate models, and then we need to understand

00:19:37 Yvette Adams

how all of these things have an impact on the human, on the person.

00:19:41 Yvette Adams

So how are these things affecting hiring people?

00:19:46 Yvette Adams

How are these things affecting promoting people?

00:19:49 Yvette Adams

Is it affecting the overall employee experience?

00:19:52 Yvette Adams

And if so, how?

00:19:53 Yvette Adams

These are things we need to keep a pulse on.

00:19:56 Yvette Adams

It's not just about technology and that risk that comes with keeping up with technology, but it's how the technology affects the people.

00:20:05 Yvette Adams

And it's critical that we have that

00:20:07 Yvette Adams

multi-disciplinary approach.

00:20:09 Mike Jacka

I think that's fantastic.

00:20:10 Mike Jacka

I mean, it's terms like data ethics and the rules around AI and all of that are just huge things.

00:20:17 Mike Jacka

And I do believe, I'm going to go a little broader here again, but I do believe we have to be very aware of the broader impacts of what's going on with AI, for example, right now.

00:20:28 Mike Jacka

There's so much discussion about the energy that's used in providing that value.

00:20:33 Mike Jacka

Okay, when the organization is involved with it, what does that say about the ethics of the organization?

00:20:38 Mike Jacka

Have they thought about that?

00:20:39 Mike Jacka

And now back to the human capital, if there has been a decision made, do the people know about it?

00:20:45 Mike Jacka

And do they understand why the company's going this way, why it's not going this way, how it's using the information that's available to talk about what is the right thing for the organization to do to not only ensure its own goals are met, but it's still a, I'll call it a service to humanity, which

00:21:02 Mike Jacka

people need to be.

00:21:04 Yvette Adams

I think that this technology brings a lot of efficiency and insight to the table, but it comes with risks.

00:21:10 Yvette Adams

So you've got the algorithmic bias, you've got data privacy concerns, you've got, like you had talked about, that general lack of transparency around how decisions are made.

00:21:22 Yvette Adams

So although technology, artificial intelligence can make things smarter, faster, there has to be that solid governance framework in order to ensure fairness, accountability.

00:21:35 Yvette Adams

Again, I like to say artificial intelligence has to be governed with human intelligence.

00:21:40 Mike Jacka

Yeah.

00:21:40 Mike Jacka

Well, and bring it straight to the human capital aspect of it.

00:21:43 Mike Jacka

Again, it's do people understand it when you speak of upskill or being upskilled in a way that they will understand how it all works and what is the impact on the employees.

00:21:52 Yvette Adams

A lot of people say, am I gonna lose my job?

00:21:55 Yvette Adams

And someone I heard say, well, yes, but you're gonna lose your job as you know it.

00:22:00 Yvette Adams

You know, if you were to look years and years ago, then we had a bunch of people doing other things.

00:22:07 Yvette Adams

I work at a bank.

00:22:08 Yvette Adams

And so you had a bunch of people in the teller line.

00:22:11 Yvette Adams

And back in the day, before I was even a banker there, then people were writing in general ledgers, right?

00:22:17 Yvette Adams

Well, we're a far cry from that, but you still need people in order to do the work.

00:22:21 Yvette Adams

It's just

00:22:22 Yvette Adams

different work.

00:22:23 Mike Jacka

I'm old enough to remember when automation was going to put us all out of work.

00:22:27 Mike Jacka

Well, automation took over the busy work and now AI can take over the new busy work.

00:22:33 Yvette Adams

I think it's exciting because honestly, I think when we can leverage our brains and use them, it's actually more fun.

00:22:41 Yvette Adams

It's more fun than doing some of those busy work.

00:22:43 Yvette Adams

To me, it's more enjoyable to be able to analyze, think through things instead of doing some of that other busy work.

00:22:50 Mike Jacka

And I will tell you, I had auditors who enjoyed that.

00:22:53 Mike Jacka

On the other hand, I had auditors work for me who didn't like that and wanted the busy work.

00:22:57 Yvette Adams

Oh, that's true.

00:22:59 Yvette Adams

To each their own.

00:23:00 Mike Jacka

Those are the ones who will be searching for new jobs.

00:23:03 Yvette Adams

Yep, Is there something in?

00:23:05 Mike Jacka

Particular you kind of wish I'd asked or something else you want to throw into this whole mix?

00:23:09 Mike Jacka

Or this one's wide open.

00:23:11 Mike Jacka

Anything you think you want to throw in about human capital?

00:23:14 Yvette Adams

We talked a little bit about employee engagement.

00:23:18 Yvette Adams

culture and how that crosses into the HR territory, that needs to start with the values versus behaviors.

00:23:25 Yvette Adams

And I know we talked a little bit about that, but you can look at things like the company's mission statement, what their values are, what is their code of conduct, and then compare that to the way decisions are made, how things are communicated to employees.

00:23:42 Yvette Adams

Are the policies that are being made, are they enforced?

00:23:45 Yvette Adams

And are they consistent among all the departments?

00:23:49 Yvette Adams

And that will tell you a lot.

00:23:51 Yvette Adams

We've talked a little bit about talking to people, but some of the things we can ask is, do you feel comfortable raising concerns?

00:23:59 Yvette Adams

Does leadership model ethical behavior?

00:24:02 Yvette Adams

And then again, you can compare some of those answers across the board and then just see how decisions are made.

00:24:08 Yvette Adams

Are decisions being made properly within the construct of whatever the company has determined decisions should be made?

00:24:17 Yvette Adams

Are things escalated appropriately so that they get to the right levels?

00:24:21 Yvette Adams

Are governance bodies kept in the loop?

00:24:23 Yvette Adams

Are things happening over here that maybe governance bodies don't know about?

00:24:28 Yvette Adams

Do our meeting minutes show that risks are being addressed, that risks are being talked about, and that they're being addressed and were avoided?

00:24:38 Yvette Adams

And then you can look at incentives and performance metrics, because often people will respond with what we incentivize them with.

00:24:47 Yvette Adams

So are we rewarding ethical behavior?

00:24:51 Yvette Adams

Are we aware of the risks when it comes to our incentives and how we're incentivizing people?

00:24:56 Yvette Adams

Are we pushing people to meet a number at all costs?

00:25:01 Yvette Adams

Are incentives misaligned such that they drive risky behavior?

00:25:06 Yvette Adams

Those are some things that I think that we need to be aware of and consider.

00:25:10 Yvette Adams

Metrics are important.

00:25:11 Yvette Adams

Again, what we measure is important.

00:25:13 Yvette Adams

Some of the things that we can measure in this space are turnover rates, pay equity,

00:25:20 Yvette Adams

training and development, health and safety, depending on what type of company you're into, that might be even more critical than others if you're construction or whatever that looks like.

00:25:29 Yvette Adams

But audit's role is growing here, and we need to make sure that what's being reported is not only accurate, but trustworthy and drives the right behavior.

00:25:38 Mike Jacka

Well, I want to thank you for your time.

00:25:41 Mike Jacka

This is, I think it's been a lot of good information.

00:25:43 Mike Jacka

I hope everybody else enjoys it, and I want to thank everybody for tuning in.

00:25:47 Yvette Adams

Thank you so much.

00:25:49 Yvette Adams

Great to be here.

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