The Colourful World of Internal Audit

The Colourful World of Internal Audit

- A Collection of Thoughts- A Collection of Thoughts

Commentary on being an Internal AuditorCommentary on being an Internal Auditor“ I’m not as dull as, I sound. Really Audit is a very interesting and diverse career. Commonperception that I get to look at numbers all day well, I don’t so it’s not all bad.”

(Source: An internal auditor providing a description of their work on Facebook)

“ I’m not as dull as, I sound. Really Audit is a very interesting and diverse career. Commonperception that I get to look at numbers all day well, I don’t so it’s not all bad.”

(Source: An internal auditor providing a description of their work on Facebook)

Attributes of World Class AuditingAttributes of World Class AuditingIn their book ‘Leading Edge Internal Auditing’, Ridley and Chambers list keyattributes of world class auditing. The key words are:

• Professional• Close to the business• Provide solutions• Independent• High profile• Change Agents• Customer-focused• Expert in controls• Cost-effective• Multi-skilled

In their book ‘Leading Edge Internal Auditing’, Ridley and Chambers list keyattributes of world class auditing. The key words are:

• Professional• Close to the business• Provide solutions• Independent• High profile• Change Agents• Customer-focused• Expert in controls• Cost-effective• Multi-skilled

Key Strategies for Internal Auditing to AchieveKey Strategies for Internal Auditing to Achieve

• Establish and communicate a clear vision & strategy

• Demonstrate the value of internal audit• Understand customer needs• Focus on risk• Improve the communication of results• Improve the audit process• Educate management on risks and controls

• Establish and communicate a clear vision & strategy

• Demonstrate the value of internal audit• Understand customer needs• Focus on risk• Improve the communication of results• Improve the audit process• Educate management on risks and controls

Risk Management, Internal Control and Everyday Life

Risk Management, Internal Control and Everyday Life

• Risk Management is not rocket science• Many organisations are using the risk register to

drive the Strategic Internal Audit Plan• In the following slide is an example of how we

address risk in our everyday lives• The example is listed first, followed by the possible

risks and controls

• Risk Management is not rocket science• Many organisations are using the risk register to

drive the Strategic Internal Audit Plan• In the following slide is an example of how we

address risk in our everyday lives• The example is listed first, followed by the possible

risks and controls

The Escaping CatThe Escaping CatSuppose that you have recently moved house and have a cat called Rupert. Alsosuppose at your old house, Rupert had a lot of places to hide in the garden. One day,you walk into the kitchen and Rupert has cleaned his whole plate of food (which is unusual for him – what is he up to?) Suppose also that you don’t let him out in the front because you are scared of what might happen to him (particularly as he is a beautiful cat). One day, you let Rupert out into the back garden and he claws himself up the wooden fence, walks across the top (unusual for him as he can’t usually hold hisbalance) and he jumps into the next garden. Suppose that the next-door neighbour hasnot moved in yet, and Rupert burrows his way out under the gate to the outside. You may be wondering where Rupert is and find him outside running around. In this example, Rupert is a slightly mad, moody and naïve cat.

Suppose that you have recently moved house and have a cat called Rupert. Alsosuppose at your old house, Rupert had a lot of places to hide in the garden. One day,you walk into the kitchen and Rupert has cleaned his whole plate of food (which is unusual for him – what is he up to?) Suppose also that you don’t let him out in the front because you are scared of what might happen to him (particularly as he is a beautiful cat). One day, you let Rupert out into the back garden and he claws himself up the wooden fence, walks across the top (unusual for him as he can’t usually hold hisbalance) and he jumps into the next garden. Suppose that the next-door neighbour hasnot moved in yet, and Rupert burrows his way out under the gate to the outside. You may be wondering where Rupert is and find him outside running around. In this example, Rupert is a slightly mad, moody and naïve cat.

Possible RisksPossible Risks• If you let Rupert out into the

garden, he may try and run away

• Rupert may encounter a situation that he cannot handle, e.g., if there is a workmen site close by with new houses being built

• Rupert may start whining• Rupert may attack the owners

for not letting him do what he wants

• If you let Rupert out into the garden, he may try and run away

• Rupert may encounter a situation that he cannot handle, e.g., if there is a workmen site close by with new houses being built

• Rupert may start whining• Rupert may attack the owners

for not letting him do what he wants

Possible ControlsPossible Controls• Give Rupert something else to

do, e.g., build an obstacle course in the garden

• Don’t let him go outside• Let him go outside but keep

an eye on him• Block up the open part of the

neighbour’s gate (this may lead to problems with your neighbour)

• Give Rupert something else to do, e.g., build an obstacle course in the garden

• Don’t let him go outside• Let him go outside but keep

an eye on him• Block up the open part of the

neighbour’s gate (this may lead to problems with your neighbour)

First ImpressionsFirst Impressions“She was a phantom of delightWhen first she gleam’d upon my sight

A lovely apparition, sentTo be a moment’s ornament;”

(Source: William Wordsworth)

“She was a phantom of delightWhen first she gleam’d upon my sight

A lovely apparition, sentTo be a moment’s ornament;”

(Source: William Wordsworth)

ImageImage• Common question posed to

outsourced internal auditors at tender presentations is how they will fit in with the culture of the organisation

• Visual works wonders• Internal Auditors have to be

professional in their approach• Can be anything from way we dress,

way we behave, attitude, speech and what we do when we are on site

• From first day of contract to final day, need to leave behind a lasting impression

• Common question posed to outsourced internal auditors at tender presentations is how they will fit in with the culture of the organisation

• Visual works wonders• Internal Auditors have to be

professional in their approach• Can be anything from way we dress,

way we behave, attitude, speech and what we do when we are on site

• From first day of contract to final day, need to leave behind a lasting impression

Things Not to Do (at a Client Site)Things Not to Do (at a Client Site)• Do not turn up at the client with zipper in your trouser open. ( May create lasting

impression which does not bode well for your firm). Remember you are an ambassador

• If you have a laptop, do not have the volume set at its highest level and have some strange sounds coming from it. (This is extremely disruptive.) If you are the supervisor and you have junior staff around, thoughts of strangulation may be passing through their minds. You are not setting them a good example and you are not doing the company any favours

• If you have paid an agency a commission for an employee, do not tell the client and everyone you meet about it. (This can be extremely annoying and counterproductive for your employee)

• Do not have your mobile phone switched on during an internal audit meeting. ( If the phone rings and you answer it, it presents the image that the client is not as important as the other person on the phone)

• Do not turn up at the client with zipper in your trouser open. ( May create lasting impression which does not bode well for your firm). Remember you are an ambassador

• If you have a laptop, do not have the volume set at its highest level and have some strange sounds coming from it. (This is extremely disruptive.) If you are the supervisor and you have junior staff around, thoughts of strangulation may be passing through their minds. You are not setting them a good example and you are not doing the company any favours

• If you have paid an agency a commission for an employee, do not tell the client and everyone you meet about it. (This can be extremely annoying and counterproductive for your employee)

• Do not have your mobile phone switched on during an internal audit meeting. ( If the phone rings and you answer it, it presents the image that the client is not as important as the other person on the phone)

Things Not to Do (at a Client Site)Things Not to Do (at a Client Site)• Do not turn up at an Audit Committee meeting and state how far

you had to drive and that you did not want to come to the site in the first place. (If you are the manager, you have a role to play, if you can’t fulfil that objective, step aside and let someone who is committed to fulfil that requirement, do so)

• Do not start cracking jokes on the first day of the audit. Remember, you’re an auditor, not a comedian

• Do not turn up at a client site and present a “know-it-all” or “I am better than you” image. Attitude makes a big difference

• Do not turn up at an Audit Committee meeting and state how far you had to drive and that you did not want to come to the site in the first place. (If you are the manager, you have a role to play, if you can’t fulfil that objective, step aside and let someone who is committed to fulfil that requirement, do so)

• Do not start cracking jokes on the first day of the audit. Remember, you’re an auditor, not a comedian

• Do not turn up at a client site and present a “know-it-all” or “I am better than you” image. Attitude makes a big difference

Things to Do• Present a professional image• Dress smartly• Be polite• Try and work with the client and

when planning meetings book them in advance

• Negotiate

Thought“Demonstrate do not explicate”

(Source: The Concise 48 Laws of Power by Robert Greene)

Symbols and Internal Audit

• Internal Auditors can learn a lot from their surroundings

• Particularly the animal kingdom

Symbolism• Scorpion = survivor. Timid creatures

that only attack if provoked• Puma – when it attacks its prey, it

does so without hesitation and focuses on the most vulnerable part

• Skunk = respect. Most animals fear a skunk and do not stray into its path because they don’t want to smell its legendary fragrance.

• Raven = magic & mysticism. Associated with Norse god Odin

Significance of Animal Totems• The Internal Auditor as a Butterfly

Auditors need to be colourful. Can be anything from clothes they wear (dress sensibly) to their characters. Change highlights the evolution of a trainee auditor to a manager and then maybe a director

• The Internal Auditor as a ScorpionA survivor mentality is required in the profession as the auditor can be thrown into all sorts of situations

Animal Totems Cont’d• The Internal Auditor as an Ant

Work, order and discipline are the foundations of an auditors approach to each assignment. Without this focus, they would never hit their deadlines on time

• The Internal Auditor as a PumaAuditors require confidence when undertaking their duties. Comes with experience. When tackling a difficult project look for the weakest part, i.e. the easiest part, which you can deal with first. With any assignment, no matter how large or small, it is always best to break it down into small bits.

The Raven• The Internal Auditor as a

RavenAuditors need to create some kind of magical aura around them. Required to attract people to them. Can be anything like a friendly approach which puts people at ease

The Global Governance PantheonThe Global Governance Pantheon