shifting the paradigm: a case study in transforming internal audit atlanta iia chapter meeting april...

Shifting the Paradigm:A Case Study in Transforming Internal Audit

Atlanta IIA Chapter MeetingApril 2013

Presenters’ Overview

CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES

Randy Earley – VP of Audit Services— 1.5 years at Cox Enterprises— 28+ years in Audit— Industries: Retail; Financial Services; Telecom; Manufacturing; Media;

Automotive— Previous Employers: JCPenney; Citigroup; Nortel Networks; Flowserve;

SuperMedia— Certifications: CIA; CISA; CRMA; CRISC

Elton O’Neal – Advisory & Assurance Director— 5.5 years at Cox Enterprises— 11+ years in Audit and IT— Industries: Telecom; Media; Automotive; Manufacturing— Previous Employers: Deloitte; International Paper— Certification: CISA

Cox Enterprises Overview


Cable Television

Telephone

Internet Access

Telecommunications

Advertising Solutions

$9.6B2012

Revenues

Vehicle Auctions

Repair Services

Certification Services

Web Tech Products

Financing Products

$2.7B2012

Revenues

TV/Radio Stations

Newspapers

Ad Sales Rep Firms

Valpak

Cox Digital Solutions

$1.9B2012

Revenues

Online Auto Ads

Kelley Blue Book

vAuto

HomeNet

Automotive

VinSolutions

$1.2B2012

Revenues

Cox Enterprises is the nation’s largest, privately-held media and broadband communications company. Headquartered in Atlanta, Cox Enterprises' 2012 revenues are more than $15 billion, and the company has more than 50,000 employees nationwide.


Cox U.S. Market Reach

Today’s Discussion


The Impetus for Change

Our Plan vs. Execution of Our Plan

Our Most Compelling Strategies

Measuring Success

Our Prologue

The Domino Effect


Questions that could not be answered…

Poor Employee Surveys Results (outlier from the

rest of the org)Change in

Org Reporting

Changes in Audit

ProfessionNo Change in Dept Strategy for 15 Years

“Are you the right size?”“Are you spending time in the right places?”

Where We Were


PEOPLE: Big 4 external audit alum (mostly SOX experience)

AUDIT PLAN: Cyclical annual plan based on revenue and time

CAREER PATH: Outplacement within Cox to Accounting/Compliance

TECHNOLOGY: Industry tools for audit planning and execution

DEPT VISION/STRATEGY: Aligned with business need

Strategic Assessment Results


Copyright © 2010 Deloitte Development LLC. All rights reserved.

INTERNAL AUDIT MATURITY AND VALUE CONTINUUMORGANIZATION &PEOPLE

COMPETENCY Financial Financial & Operational Financial, Operational

& Strategic

GOVERNANCE No Involvement Limited Involvement Internal Audit as

Advisor/Facilitator

CHARTER/ROLE

Financial Controls &Compliance with Policy

Financial Controls &Operational Effectiveness

Business Controls &Risk Advisor

PROCESSES &

METHODOLOGIES

RISK FOCUS Financial & Compliance Financial, Compliance & Operational Enterprise Risks

METHODS SOX controls & Compliance Checklists

Process & ControlsInternal Audit Programs Risk Intelligence Frameworks

REPORTS Financial & Compliance Issues

Process & Operational Improvements

Proactive Risk/TrendsAnalysis & Reporting

STAKEHOLDER &TECHNOLOGY

STYLE Corporate Police/Reporter Consultative Trusted Advisor

PERSPECTIVE Historic/Reactive Current Proactive/Future

TECHNOLOGY Basic Project Management &

Administrative SystemsData Analysis & Continuous Auditing/Monitoring

Perceived Current State

Desired Future State* Strategic Assessment Review (SAR) completed by Deloitte in

December 2010.

Feedback from Our Customers


“… majoring in the minors.”

“A paradigm shift is in order….”

“… need an approach to prioritize [risks].”

“… too much focus on things that don't matter.”

“… staff is long on compliance, short on strategy/ops.”

The Start of Our Journey:Tweaking Our Compass

Deloitte’s Action Plan Roadmap


Q4

2010Deloitte’s Strategic Assessment completed

Jan-Feb 2011Confirm management expectations

Scope Risk Assessment Phase I

Mar-May 2011Conduct a comprehensive risk assessment

Jun 2011Develop an expanded audit risk universe & audit plan

Jul 2011Report out Risk Assessment results

Develop organization and skill set requirements

Jul 2011+Rebuild methodologies, processes, and technologies

Aug 2011+Enhance reporting and communication practices

Scope Risk Assessment Phase II

Our Immediate Next Steps


Performing benchmarking– Other companies– Online tools/services

Collaborating with a transformation partner– Risk Assessment processes– Talent Management processes

Our Transformed Vision


PO

RTFO

LIO

OF

SER

VIC

ES

AUDIT SERVICES VISIONO

RG

INFR

AS

TR

UC

TU

RE

STRATEGY AND VISION (UPPER MANAGEMENT)

TECHNOLOGY & TEMPLATES

METHODOLOGY & FRAMEWORK

PERFORMANCE METRICS

TALENT MANAGEMENT

PROJECT RESOURCES (MIDDLE MANAGEMENT & STAFF)

INP

UTS

ASSURANCE

PROTECT

ADVISORY

ENHANCE

STRUCTURED

OBLIGATIONS

DYNAMIC IDEAS FROM RISK ASSESSMENT, STAKEHOLDER MEETINGS, INDUSTRY PRACTICES, AND COMPANY

STRATEGIES/GOALS

VERIFY

Our Transformation Roadmap


PLAN

PLAN Enterprise Risk

Assessment 2011 Audit Plan Update

Q2 Project Scheduling & Plans

30 DAYS 60 DAYS 90 DAYS 120 DAYS 120+ DAYS

OR

GA

NIZ

ATIO

N

&P

EO

PLE

CHANGE MANAGEMENT/PROJECT MANAGEMENT

JAN 2011

PR

OC

ESS

ES

&

METH

OD

OLO

GIE

S

STA

KEH

OLD

ER

& T

EC

HN

OLO

GY

PLANCOMPETEN

CY

GOVERNANCE

CHARTER/ROLE

RISK FOCUS

METHODS

REPORTS

STYLE

PERSPECTIVE

TECHNOLOGY

PLAN

PLAN

New AS Org Structure Inventory of Existing Skill

Sets

Coordination with CEI HR New Recruiting

Requirements

AS Training Plan AS Talent Management

Plan

Business Leader Program AS Emissary Program

Transformation Steering Committee

2011 Budget Update Mission/Vision Statement

New AS Charter

Audit Program Rationalization

Process Analysis Framework

Project Selection & Scoping

Project Staffing Strategy

PLAN Reporting Methods Reporting Formats

Reporting Tools

PLAN AS Corporate Rebranding AS Management Org /Role

Stakeholder Feedback Loop

PLAN Audit Transformation

Benchmarking End-to-End Transformation

Work Plan Transformation & Dept

Metrics

PLAN Technology Requirements Data Requirements

Tech Tools Research Tech Tools Selection

Technology Implementation Roadmap

WORK STREAM

Our Transformation Roadmap


PLAN

PLAN Enterprise Risk

Assessment 2011 Audit Plan Update

Q2 Project Scheduling & Plans

CHANGE MANAGEMENT/PROJECT MANAGEMENT

PR

OC

ESS

ES

&

METH

OD

OLO

GIE

S

STA

KEH

OLD

ER

& T

EC

HN

OLO

GY

RISK FOCUS

METHODS

REPORTS

STYLE

PERSPECTIVE

TECHNOLOGY

Audit Program Rationalization

Process Analysis Framework

Project Selection & Scoping

Project Staffing Strategy

PLAN Reporting Methods Reporting Formats

Reporting Tools

PLAN AS Corporate Rebranding AS Management Org /Role

Stakeholder Feedback Loop

PLAN Audit Transformation

Benchmarking End-to-End Transformation

Work Plan Transformation & Dept

Metrics

PLAN Technology Requirements Data Requirements

Tech Tools Research Tech Tools Selection

Technology Implementation Roadmap

Despite building a comprehensive plan for 2011, our greatest needs and gaps from our stakeholders’ perspectives were focused on two distinct areas.

So, our true transformation was focused on:

RISK FOCUS

COMPETENCY

Three Year Vision (circa 2011)


2011TRANSFORM

2012BUILD

2013STABILIZE

RISK FOCUSCOMPETENC

Y

EVERYTHING ELSE

INTERNAL IMPROVEME

NTS

We identified our greatest needs and gaps,and then addressing them became

the foundation of our transformation.

Exploring New Territory:Our 1st Risk Assessment


Our Risk Assessment Approach


April 2011

Q12012

2012 &

Beyond

Overall Approach

Point-in-Time assessment featuring 60+ stakeholders from CCI, MAN, and CEI

Target audience: VPs and Directors

Risk ranking performed internally by Audit mgmt team and Deloitte

Update of 2011 results featuring stakeholders from all Cox Divisions

Target audience: EVPs and SVPs initially (top-down approach)

Risk ranking vetted through Cox Divisional stakeholders

Ongoing function and responsibility of VP and Director roles

Target audience: EVPs/SVPs quarterly; VPs/Directors monthly

Quarterly validation of risk identification and ranking

Focused Risk Heat Map


2 1

3 4

67

9

810 11

1213

14

16

5

15

17

18

IMPA

CT (

Inh

ere

nt

Ris

k)

VULNERABILITY (Residual Risk)

# RISKAUDIT

COVERAGE IT 1 Current State DR2 Information Security3 Future Growth DR 4 Growth Infrastructure 5 IT InvestmentsSTRATEGIC6 Maturing Market 7 Innovation Incubation 8 Organizational Effectiveness9 Transformation/Centralization 10 Market Response Time OPERATIONAL11 Data Governance12 Business Intelligence 13 Inventory PlanningFINANCIAL14 Investment Integration15 Investment Due Diligence16 Internal Controls COMPLIANCE17 Company Policies 18 E-Rate/Lifeline Compliance

White diamonds indicate areas of current Audit coverage.

The Iterative Process


JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Hold risk and relationship management interviews with key stakeholders (SVPs, VPs, and Directors)

across business units

Debrief executive

stakeholders on risk update

Debrief executive

stakeholders on risk update

Going Off-Road:Talent Assessments

Assessing Our Current Staff


Required across the organization in order for

leaders and professionals to be

successful

Needed for success in a particular job

family or position/level

Focused on a specific job role

or the application of specific knowledge

Technical Competencies

ProfessionalCompetencies

Leadership

Competencies

Our New Operating Model


VPVP

Dir

ecto

rD

irecto

rM

an

ag

er

Man

ag

er

Sp

ecia

list

Data

An

aly

st

Sp

ecia

list

Data

An

aly

st

Project Execution& Project Delivery

Project Management& People Development

Vision& Strategy

Planning& Operations

Delivery

Delivery

Relationship Management& Operationalization

COLLABORATION – CASH FLOW – CUSTOMERS – COMMUNITY

http://coxenterprises.mediaroom.com/file.php/75/Cox+Enterprises-large.jpg

http://coxenterprises.mediaroom.com/file.php/152/CMG_Corporate_Color+2010_Lg.jpg

http://coxenterprises.mediaroom.com/file.php/80/AutoTrader.com-large.jpg

http://coxenterprises.mediaroom.com/file.php/78/Manheim-large.jpg

http://coxenterprises.mediaroom.com/file.php/78/Manheim-large.jpg

Building a Talent Assessment Center


Measure of Candidate Potential

Interviews

Psycho- metrics

Simulations

+Consensus

Final Decision

Critical Success Factors? Well-defined job descriptions and competencies Well-defined decision-making methodology Well-trained and dedicated Assessors Well-organized logistics (free from distractions)

How? Develop a highly objective and scalable

process Assess performance against clearly defined

competencies Use realistic, work-based scenarios to

predict future potential Develop standardized scoring and success

measures

Our Assessment Process


Candidates

Assessment

Workforce Transition

Types of Assessments Analytical Fit Behavioral Fit Position/level Fit Cultural Fit

Personnel Requirements 3 – 8 Candidates 6 – 16 Assessors

Timeframe: 5 Weeks Recruiting/Initiation as

Needed Full Day of Exercises Same Day Decisions

Paving a New Path

Department Priorities thru Transformation

Technology Tools

Methodology Project Data

Change Mgmt Stakeholder Mgmt Communication

Plan

Recruiting Staff Training Co-Sourcing

AutoTrader.com Cox Media

Group Phase I Follow-

UpRisk

Assessment Phase II

Talent Manageme

nt

DeptInfrastructu

re

BrandBuild-Out

Projects


Where We Are Today


PEOPLE: Diverse mix of Big 4 alum and mgmt consultants

AUDIT PLAN: Rolling 6-month, risk-based plan

CAREER PATH: Outplacement within Cox to varied career options

TECHNOLOGY: GRC implemented; technology and data roadmap

DEPT VISION/STRATEGY: Strategic business partner

Three Year Vision (circa 2012)


BUILD Complete 2012 Audit Plan

within the approved budget

Standardize methodologies & implement technology solutions to drive efficiencies

Finalize talent mgmt and recruit to full headcount

Pilot the business leader development program

2012 2013 2014

People – Build competency and proficiency to support a best practice, world class internal audit function and serve as a springboard for Cox leadership

Process – Develop and operationalize internal processes to be as efficient and effective as possible while being aligned with Cox strategies and management’s intentions

Technology – Implement solutions expanding risk coverage and achieving efficiencies that will allow us to focus on value enhancement without compromising the oversight of risks and controls

STABILIZE Complete 2013 Audit Plan


Rotate projects and resources through each DIV quarterly

Complete one full rotation of the business leader development program

Maintain full headcount

SUSTAIN Complete 2014 Audit Plan


Graduate 1-2 AS associates to leadership positions within Cox Divisions

Maintain full headcount

Reassess alignment of department services with stakeholder needs

Our Current Org Structure


PwC Staff/Seniors

Director SME Director SME

Vice

President

Exec

Assistant

Advisory & Assurance Manager

Advisory & Assurance Specialist/Data Analyst

PwC Subject Matter Resources


OUTPLACEMENTOUTPLACEMENT

PROMOTION

ADVISORY & ASSURANCE SPECIALIST

OUTPLACEMENTOUTPLACEMENT

PROMOTION

ADVISORY & ASSURANCE MANAGER

OUTPLACEMENT

ADVISORY & ASSURANCE DIRECTOR

Major/Minor 12 – 15 projects +100 hours core

curriculum +40 hours IDP training 8 career dev sessions

Functional SME 18 – 22 projects +180 hours IDP training 3 – 5 direct reports 12 career dev sessions

Divisional SME Functional SME 24 – 28 projects +240 hours IDP training 2 – 4 direct reports

(mgmt) 16 career dev sessions

Our Value Proposition to Our Staff

Technology-Enabled Methodology


Project Selection

Stakeholder

Discussions

Strategy &

Objectives

Risk Assessme

nt

Advisory

Compliance

Prioritization

• By Function• By Division• By Risk

MULTI-LAYER REPORTING CAPABILITY

• Audit Committee• Management (John Dyer)• Stakeholders

AUDIENCE

Assurance

Department Branding


The Moral of Our Story:Lessons Learned

The Top 5 Critical Success Factors


Executive SponsorshipExecutive SponsorshipExecutive SponsorshipPrioritization & CommunicationTalent: Get the right people on the

bus!

Tie your transformation to the things that matter to your

organization.


Focus of Cox Employee Survey


Addressed by Transformation

INVOLVEMENT &

BELONGING

LEADERSHIP

PERFORMANCE

MANAGEMENT

RECOGNITION AND

REWARDS

SURVEY FOLLOW-UP

TEAMWORK

VALUES

WORK-LIFE BALANCE

CHANGE MANAGEMENT

COMMUNICATION

COMMUNITY OUTREACH

COMPENSATION &

BENEFITS

CUSTOMER FOCUS

DIVERSITY

ETHICS

FUTURE/VISION

GROWTH AND

DEVELOPMENT

Communicate early, frequently,repeatedly, and transparently!

Don’t be afraid to share your vision and plans, even if you

know they’ll change… and they will change.


The Evolution of Our Vision


Don’t underestimate the effort and time required for every work

stream.

Execution will feel more likerevolution than evolution.


Talent Assessment Workstream


Week 0 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6July 15

July 22

July 29

Aug 5Aug 12

Jun July 8

A) Competency Framework &

Mapping

• Develop departmental Competency Framework

• Conduct Job Level to Competency Mapping

D) Assessor & Role Player Briefing

• Develop Assessor Briefing Deck and materials

• Brief Assessors on AC* Methodology and Exercises

• Identify and train role players to deliver consistent experience

A06/29

E08/02 & 08/03

A,B,C,D07/18

B06/29

A,B,C07/08

Aon

HRReview

Legal Review

Audit Team

A,B,C,D

07/19

E) Assessment Center

• Conduct AC* per Job Level per day

Assessment Center Materials / Activities

C) Assessment Center Methodology

/Exercises

• Identify Critical Competencies (for assessment)

• Develop AC* Exercises

• Develop AC* Methodology (schedule, scoring process, AC*templates)

B) Job Descriptions

• Design Job Descriptions

• Validate Competency Framework against Job Descriptions

+ + + =

B,C07/07

D07/15

F) Consensus Meeting

• Determine Successful Candidates

&

F08/05

F08/05

D07/08

G07/27

H08/12

H08/12

Complex doesn’t mean better.

Strive to streamline and simplify your transformation roadmap and

solutions.

Why?


Project delivery is still expected.

Exceeding expectations on project delivery will give your transformation tremendous

momentum.


How did we measure success?


Candidly positive stakeholder feedback– On both new state and old state

Steady flow in our project pipeline– New types of projects: strategic and

operational

Highly engaged Audit staff– Positive 2012 employee survey results– Project staffing shifted from capability to

bandwidth

Thank you for your attention!

Questions?

[email protected]

[email protected]


shifting the paradigm: a case study in transforming internal audit atlanta iia chapter meeting april...

Documents

revenues cox enterprises

audit industries

audit planning

audit profession

external audit alum

sox experience audit

cisa slide

financial controls compliance