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Views of Value and CompetencyHow Stakeholder and Internal Auditor Perspectives Compare
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AgendaResearch ProjectResults
◦Competencies◦Value◦Overall
What Can You Do?CBOK 2015
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The Project
Sponsored by the Institute of Internal Auditors Research Foundation
Championed by Larry Harrington, Vice President of Internal Audit, Raytheon
Researchers:◦ Vu Pham, Ph.D., Managing
Partner, Spectrum Knowledge, Inc.
◦ Betsy Bosak, Ed.D., Partner, Spectrum Knowledge, Inc.
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Research QuestionsHow do stakeholders rate internal
auditors on the competencies internal auditors use to do their jobs?
How do stakeholders rate the internal audit activity on the value it provides?
How do stakeholders’ perceptions compare to internal auditors’ perceptions about themselves?
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Research PlanSurveys
◦2010 Common Body of Knowledge (CBOK)
◦IIA’s Global Internal Audit Competency Framework
Focus Groups◦Stakeholders – 12 participants◦Internal Auditors – 12 participants◦Validated survey questions◦Assisted in interpretation of results
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Distribution of Responses
Internal Auditors
Stakeholders
0% 20% 40% 60% 80%100%
45%
29%
38%
34%
18%
38%
Individual Contribu-torManagement/SupervisorExecutive/Upper Management
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Analysis of Responses
Scale: ◦ 1 = Poor ◦ 2 = Marginal◦ 3 = Fair◦ 4 = Very Good◦ 5 = Excellent
Categories
◦ Negative/Neutral (Poor, Marginal, Fair)
◦ Positive (Very Good, Excellent)
Competencies
Value
Scale of 1 (No Extent) – 5 (Great Extent)
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Competencies
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Categories of Competencies
General
Behavioral
Technical
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Most Important Competencies
Confidentiality (behavioral)Objectivity (behavioral)Communication skills (general)Communication (behavioral)Problem-identification and solution skills (general)Judgment (behavioral)Works well with all management levels
(behavioral)Understanding the business (technical)Risk analysis and control assessment techniques
(technical)Governance and ethics sensitivity (behavioral)
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Highest-Rated Competencies
Maintains Con-fidentiality
Ethics Professionalism Objectivity0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% 94% 95%89% 91%91% 90% 87%
79%
Internal Auditors Stakeholders
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Most Important Competencies
ConfidentialityObjectivityCommunication skills (general)Communication (behavioral)Problem-identification and solution skillsJudgmentWorks well with all management levelsUnderstanding the businessRisk analysis and control assessment
techniquesGovernance and ethics sensitivity
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Lowest-Rated Competencies
0%
20%
40%
60%
80%64% 62%
72%58%59% 60% 59%
69%
Internal Auditors Stakeholders
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Largest GapsUnderstanding the BusinessProblem-Solving SkillsJudgmentBusiness Process AnalysisProblem-Identification SkillsObjectivityData Collection and Analysis
Tools and Techniques
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A CLOSER LOOK AT THE GAPS
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Understanding the Business
Possible reasons:◦ Different
expectations◦ Auditors not
asking the right questions
◦ Communication challenges/barriers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
83%
61%
Internal AuditorsStakeholders
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Understanding the Business
Ideas to address the gap:◦Better planning◦Relationship-building
What are management’s needs? Communication
◦Training and Development Management – value and capabilities of
audit Audit staff – communication skills,
business-related
◦Auditor Rotation
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Problem Identification/Solving
Possible Reasons:◦ Need for a better
understanding of the client’s business
◦ Communications challenges/barriers
◦ Need to better collaborate on recommendations
Problem Identification
Problem Solving
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
82% 79%70%
63%
Internal AuditorsStakeholders
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Problem Identification/Solving
Ideas to address the gap:◦Increased communications
Earlier notification and more in-depth discussion of issues
◦Relationship-building Collaboration on developing
recommendations
◦Training Critical thinking – root cause analysis Strategic thinking – data analytics, assessing
data reliability Problem solving
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Judgment/ObjectivityPossible
Reasons:◦ Not
understanding the audit process
◦ Surprises in audit reports
Judgment Objectivity0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
86%91%
72%79%
Internal AuditorsStakeholders
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Judgment/ObjectivityIdeas to address the gap:
◦Establish what can be expected Audit Charter Strong Entrance Conferences
◦Routine communication throughout audit
◦Issue Sheets As issues arise
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Other Lower-Rated CompetenciesConflict Resolution/Negotiation
Skills◦Training◦Practice
Ability to Demonstrate/Promote the Value of the Internal Audit Function◦Participation on task forces◦Assignment to special projects◦Communications during audits
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Putting the Results to Action
Capitalize on the highest rated competencies◦What services can you offer that
include these?◦How do you get the word out?
Identify training opportunities for competencies rated lower
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Perceptions of Value
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IIA Value Proposition
AssuranceGovernance, Risk,
ControlInsight
Catalyst, Analyses, Assessments
ObjectivityIntegrity, Accountability,
Independence
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Survey QuestionsTo what extent do you feel the internal
audit function adds value to your organization?
To what extent does internal audit have visibility in your organization?
To what extent is internal audit respected in your organization?
Overall, how would you rate the performance of the internal audit function?
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Adding Value
1 2 3 4 50%
5%
10%
15%
20%
25%
30%
35%
40%
0%2%
22%
38% 38%
3% 3%
28% 29%
37%
Internal Auditors Stakeholders
Average Rating: Internal Auditors – 4.1 Stakeholders – 3.9
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Improving Perceptions of Value
Increase awareness and education
Market the internal audit activity
Highlight the highest rated competencies
Gain support for audit activities from all levels of management
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Improving Perceptions of Value
Improve communication
Build client relationships
Provide practical solutions
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Visibility
1 2 3 4 50%
5%
10%
15%
20%
25%
30%
35%
40%
1%4%
32%
37%
27%
3%5%
26%
34%32%
Internal Audit Stakeholders
Average Rating: Internal Auditors – 3.9 Stakeholders – 3.9
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Increasing VisibilityObtain a “seat at the table”
Market the internal audit activity
Make audit reports available to staff
Build relationships
Get audit staff involved
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Extent of Respect
1 2 3 4 50%
5%
10%
15%
20%
25%
30%
35%
40%
1%
9%
38% 37%
15%
3%
10%
38%
30%
20%
Internal Auditors Stakeholders
Average Rating: Internal Auditors – 3.6 Stakeholders – 3.5
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Gaining RespectDeliver
Build awareness of senior management’s support
Improve perceptions throughout the organization’s culture
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Gaining RespectStress the importance of internal
audit in management training
Increase education and awareness
Relationship building
Training
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Overall Performance
1 2 3 4 50%
10%
20%
30%
40%
50%
60%
70%
1% 3%
22%
65%
10%
2%
9%
26%
47%
16%
Internal Auditors Stakeholders
Average Rating: Internal Auditors – 3.8 Stakeholders – 3.6
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The Bottom LineLeverage strengths related to
confidentiality, ethics, and professionalism.
Enhance skills and communication related to understanding business, solving problems, objectivity, and judgment.
Continue to build recognition.
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Some Things To Think About
Is this reflective of what you would see if you compared your ratings with your stakeholders?
How can some of these gaps be reduced?
How can some of the lower rated competencies be strengthened?
What else needs to be done?
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What Can You Do?Administer a similar survey – to your
stakeholders and internal audit staff
Identify and capitalize on your strengths
Develop goals and action plans to address areas identified as weaknesses
Incorporate the information into your annual internal assessment
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CBOK 2015Practitioner Survey open until
3/27◦Google CBOK Resource Exchange
Planned Deliverables:◦Core Reports◦Fast Facts◦More In-Depth Looks◦Database for Future Research
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Any Questions?Contact Information:
Karin Hill, CIA, CGAP, CRMADirector of Internal Audit
Dept. of Assistive and Rehabilitative Services