5 Ways Internal Audit Can Add More Value

There are plenty of things these days that make me feel a bit older than I’d like. While I understand that age is just a number, that number never seems to stop creeping higher. I am fortunate to work with several bright young people, but my cultural references to Betamax, Intellivision and the movie Sixteen Candles fly right over their heads.

Another thing that makes me feel old lately is the fact that I can now say I have over 20 years of professional experience. However, I believe this is something that I can be proud of. I’ve spent two decades contributing, learning, struggling and succeeding, and that collection of experiences has helped to shape who I am today. For over half of that 20 years I was an internal audit practitioner, and I’ve spent the remainder working to help internal auditors and other professionals build processes and systems that give them structure, efficiency and clarity. I’ll certainly take that as a positive.

One thing that I have always enjoyed about my 20 years of involvement with the internal audit profession is the concept of adding value. The profession has spent the last 75-plus years building itself on the foundations of integrity, independence, responsibility, quality and contribution to those it serves. These principles have served me well in my career, giving me a solid foundation for doing something meaningful and making positive contributions in my work and in my life.

The internal audit profession has long called upon itself to add value to the organizations it serves. It’s not just about performing audits, testing controls and issuing reports. Internal audit is expected to use its unique position within the organization to take the collection of individual pieces and parts and build a comprehensive view of the company and provide valuable guidance on the strengths, weaknesses, threats and opportunities that the organization must navigate in order to succeed.

One thing I’ll offer as a contribution to the greater good is my perspective on how internal audit departments can position themselves to be a true value-adding component of their organization.

1) Put the IIA Standards First

The IIA’s International Standards for the Professional Practice of Internal Auditing serve as the foundation of the profession, and following this mandatory guidance is the most important thing internal auditors can do in their quest to add value. IIA President and CEO Richard Chambers points out in his recent blog post that while the standards are the essential foundation, a troubling number of IA departments cannot currently demonstrate that they are fully compliant with the internal audit standards. Mr. Chambers states:

“Conformance with internal audit standards has a direct impact on the effectiveness and stature of every internal audit department.”

I interpret this as follows: If your department isn’t following the internal audit standards, you won’t be in a position to add value to your organization. Focus internally, strengthen your approach and practices and you’ll be well-positioned to serve others.

2) Develop and Assess Business Acumen

Another article from the IIA titled Digging for Value points out the value of developing a strong understanding of the business within your internal audit staff. The article tells the story of an internal audit director at a mining company in Chile who performs monthly visits to the company’s mining operations and spends time getting a thorough understanding of what the miners themselves are dealing with. I see this as excellent advice. If you hope to contribute something positive to your organization, you need to have a sound understanding of its goals, objectives and operations. This is not to say that every internal auditor needs to be an expert in every aspect of your business. Rather, it is more important to understand the collective strengths and weaknesses in your department’s overall acumen and to take action in developing the knowledge internally or outsourcing to trusted experts where and when it is warranted.

3) Focus on Value in Your Work

In order to add value, you need to actively identify situations where an independent and informed perspective could be of some assistance. As you plan your internal audits, balance your need to provide assurance with an outsider’s mindset of “how can we help.” Recommendations don’t need to have a multi-million dollar impact or completely shake up the way business is done in order to be impactful and value adding. Even a seemingly small suggestion can go a long way in helping your stakeholders see things in a different light and open up potential improvements that just haven’t been thought of yet.

4) Nurture Relationships and Keep and Open Mind

This piece of advice is a bit “softer” in comparison to the first two, but soft skills are essential if your group is to be viewed as trusted business advisors. Complying with the standards and knowing the business inside and out does you no good if you haven’t built trust among your stakeholders. Internal audits must operate from a position of trust and understanding in order to succeed. If your group has a less than desirable reputation in your organization, identify actions you can take to start changing perceptions and rebuilding relationships. Maintain an open dialogue with line managers about what they’re seeing and when they need help. And keep an open mind regarding who has something to contribute. Actively seek opportunities to build relationships with individuals at all levels within the business; you may be surprised at what you learn.

5) Practice What You Preach

A major step in building trust with the business is to demonstrate to them that you want to hear their ideas for improving how internal audit operates. Actively seek feedback from your stakeholders before, during and after engagements. What were their expectations? Were they clearly communicated? Did you perform as you said you would? How would they like to see things done differently? Again, not every recommendation has to be implemented, but hearing what your stakeholders have to say will go a long way in establishing a mutually beneficial relationship.

These five practices aren’t just for the big internal audit shops. Even small teams of 3-5 auditors can achieve excellence by adhering to the IIA standards, understanding the businesses they serve, and building trust with organizational leaders and the board. In fact, in my experience, I’ve found that those “small but mighty” teams often deliver remarkable business value because every member of the team is an A-player: focused, persistent, open to change and eager to learn. Those are qualities we should all be proud to possess. Click here to learn more about Onspring’s internal audit and assurance enterprise solution.

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