positioning internal audit for the future
TRANSCRIPT
POSITIONING INTERNAL AUDIT FOR THE FUTURE
SETTING EXPECTATIONS
• Plant seeds that will provoke your thinking over time• Encourage you to think a little differently about something• Take away at least one new idea
WHAT DOES AN INTERNAL AUDITOR DO?
What other departments think we do
What we really do
What our parents think we do
What we think we do
What society thinks we do
What Audit Committees think we do
STAKEHOLDER PERCEPTIONS
Source: PwC 2013 State of the internal audit profession study
1,700 executives participates in the 9th annual PwC State of the Internal Audit Profession Study - there are clear alignment and expectation gaps
STAKEHOLDER PERCEPTIONS
Source: PwC 2013 State of the internal audit profession study
The majority of Board Members think IA contributes significant value despite how they perceive IA is performing in key areas
STAKEHOLDER COMMENTS
• ‘Auditors are very predictable. They do the same things over and over, year after year. They focus on the usual and stay away from the unusual.’
• ‘Audit reports seem to emphasize a keen sense of the obvious and miss the really big things.’
• ‘I wish our auditors would focus on being better communicators. When they speak or write, people tend to tune out.’
• ‘The most frustrating thing is when the auditors make big conclusions on small samples – there is no basis for that!’
• ‘My auditors give me lots of information but very little insight.’
Perception of hindsight versus foresight
CHANGING RISK ENVIRONMENT
The world is constantly changing – new risks are always emerging:• Economic pressures, challenges• Extreme weather• Population growth, aging• Political instability
Risks are continuously evolving:• More dynamic, agile businesses• Regulatory changes, more
enforcement• Talent that can drive, navigate
competitive advantage• Fraud, waste and abuse
Hard to keep up with the speed of growth, change, use of technology:• Cyber threats• Privacy issues• Social media. reputation impact• Big Data
MANAGING RISK
Source: IIA Pulse of the Profession - Defining Our Role in a Changing Landscape Report
FUTURE AUDIT POTENTIAL
Source: PwC 2013 State of the internal audit profession study
FUTURE AUDIT POTENTIAL
• Consider creating or updating a ‘Vision’ and ‘Mission’ for Internal Audit – clearly articulate your ‘Value Proposition:
• What does it include?• What does it exclude?• What has changed?• Where are you now?• How will you get there?• How long will it take?
THE FUTURE AUDITOR
• Is PASSIONATE about what they do • Has a clear value proposition that is ALIGNED with all
stakeholders• Focuses on what REALLY MATTERS• Has EXPERTISE that is VALUED• Influences business STRATEGIES and LEADERS
Provides stakeholders with meaningful insights
ATTRIBUTES OF FUTURE AUDITOR
• Is intellectually curious• Speaks the language of the business• Continually works to cultivate, nurture strong relationships• Inspires others• Can identify, understand emerging risks, business issues• Thinks creatively and is highly innovative• Understands technology and its role in the business• Is a data guru
Nature vs. Nurture
POSITIONING FOR FUTURE - PEOPLE
• Assess your team attributes against the attributes of the Future Auditor to prioritize your opportunities for improving the composition of you team:
Cookie cutter audit teams are not the way to go
POSITIONING FOR FUTURE - PEOPLE
• Re-evaluate your team competency models• Align feedback processes to promote growth in key areas• Assess the adequacy of your investment in the right
training and development for your team• Establish reward/reinforcement strategies to recognize
demonstration of or improvement in critical skills• Create opportunities to step outside of comfort zones• Consider hiring people that are not auditors
Consider WIN-WIN transition strategies if necessary
POSITIONING FOR FUTURE - PROCESS
• Re-evaluate how your team assesses risk – consider:• Is it holistic, timely and meaningful?• Is their true collaboration with other functions to ensure an
integrated view of risk?• Would your process identify an emerging internal or external
risk?• Re-evaluate the impact of your work:• Is it focused on things that really matter to the business?• Does it tell people something that they didn’t know?• Does it drive real business results?
POSITIONING FOR FUTURE - PROCESS
• Constantly review and improve methodologies, programs and tools to ensure that you are maximizing efficiency:
• Where are the bottlenecks?
• Manual work be automated – ‘routines’ for ‘routine’?
• Doing things that people don’t pay attention to or care about?
• Is there anything that is no longer relevant?
• Do you look back at what you’ve done find improvement opportunities that changes the way you work?
POSITIONING FOR FUTURE - TECH
Foundational capabilities to deliver value
Solid understanding of the technologies of the business drives audit strategy
Maximum leverage of continuous monitoring
Deep data analysis and analytical capabilities
POSITIONING FOR FUTURE - TECH
• Strategic use of technology can be a BIG lever for improving stakeholder perceptions and shift the team’s focus of hindsight to insight and eventually foresight….• USE continuous monitoring, data analysis in risk assessment
• Be CREATIVE about how you approach data analysis - deliver WOW factor
• Beware of the ‘OVERWHELMING’ TRAP – data is NOT insight
• SHARE your tools with the business to collaborate and learn
Set REALISTIC goals for the team to ensure SUCCESS
IA TEAM OF THE FUTURE
• Focus on maximizing the IMPACT of your contribution to the business
• INVEST in the PEOPLE and TOOLS necessary for success• Create and nurture a CULTURE of innovation and quality
improvement• Cultivate the SOFT skills to build great relationships
Focus on INSIGHT and FORESIGHT not hindsight
