Understanding and Adapting to

Change in the Audit Environment Sharon Howell

2015 NWFL ACFE/IIA Fall Seminar

December 8, 2015

Agenda

• Air Force Audit Agency Background

• The Audit Environment

• Understanding Change Resistance

• The SCARF Model

• Overcoming Resistance

Air Force Audit Agency

AFAA

• Mission: Provide timely, relevant, and quality audit services to all levels of Air Force management.

• Overall objective is to assist commanders and airmen meet their mission and be accountable to taxpayers.

Who We Are

• Highly Qualified Staff

▫ 100% Bachelor’s Degree with Accounting Emphasis

▫ 45% Advanced Degrees

▫ 50% Certifications

▫ 16% Attended PME

• Experience in Multiple Disciplines

• Unique Skill Sets

Wright-

Patterson

NCR

Directorates Area Audit Offices Team Offices Operating Locations CDA Branches

Directorates Eastern Audit Region Western Audit Region Other Locations

Randolph

Air Force Audit Agency Offices

Gulf Coast AAO Responsibility

Types of Audits

• Centrally Directed

▫ Air Force Wide Evaluations

▫ Accomplished at Multiple Installations

• Installation Level

▫ Evaluation of Local Operations

▫ Single Location

What We Audit

• Financial

▫ Financial Improvement and Audit Readiness (FIAR)

Focus on processes and systems

• Performance

▫ Economy and Efficiency

▫ Program Effectiveness

Internal

Controls!

Organization AUDITOR GENERAL OF THE AIR

FORCE (Pentagon VA) Daniel McMillin

OPERATIONS DIRECTORATE (JB Andrews MD)

Julie Hogan

Operations Division Kimberly Moore

Resource Management Division

Ava Jefferson

ACQUISITION, LOGISTICS, AND FINANCIAL AUDITS

DIRECTORATE (Wright-Patterson AFB OH)

Vacant

Acquisition Division Joe Ritzel

Financial Management Division

Patrick Fravel

Maintenance Division Julie Sullivan

Supply Division Gerald Colter

OPERATIONS AND SUPPORT AUDITS DIRECTORATE

(JBSA-Randolph TX) Michael Petersen

Air and Space Operations Division

Elvis Ruiz

Cyberspace Division Matt Ralph

Engineering and Environment Division

Bruce Carpenter

Personnel, Training, and Healthcare Division

Anne Faircloth

FIELD ACTIVITIES DIRECTORATE (Pentagon VA)

Laura Jankovich

AOR Expeditionary AAO (Pentagon VA) Patrick Harding

Eastern Audit Region (Wright-Patterson AFB OH)

Cathy Bromley

Atlantic AAO James Szewczyk

European AAO Isabel Neunsinger

Gulf Coast AAO Luvenia Shuman

Midwest AAO Cindy Wobbe

Northeast AAO Rafus Grier

Ohio Valley AAO Susan Woodford

Southeast AAO Janet Herndon

Western Audit Region (JBSA-Randolph TX)

Charles Atkinson

Central Plains AAO Blanche Tomlinson

Intermountain West AAO Clarence Hayes

Mountain AAO Pauline Barela

Northwest AAO Lisa Hepler

Pacific AAO Olivia Hardin

South Central AAO Davina Lock

Southwest AAO Scott Saltz

SPECIAL PROGRAMS DIVISION

(Pentagon VA) Terry Dilly

EEO COUNSELOR (Pentagon VA) Kevin Bremby

10

Support and

Personnel Engineering &

Environment Air & Space

Operations

Health Care

Manpower &

Personnel

Acquisitions

and Logistics Logistics

Maintenance

Acquisition

Supply

Contracting Info Systems

Development

Financial and

Systems

Financial Mgmt

Info Systems

Security & Comm

Internal Audit

Effectiveness/Efficiency

Program Results

Fiduciary Stewardship

Accurate Financial Reporting

Audit Areas

How We Do It

• Government Accountability Office (GAO) Generally Accepted Government Auditing Standards (GAGAS)

▫ Independence

Independence of Mind

Independence of

Appearance

GAGAS

▫ Professional Judgment

Reasonable Care

Professional Skepticism

▫ Competence

▫ Quality Control and Assurance

The Audit Environment

• Do more with less

• Personnel wear multiple hats

• Systems update and merge

How Audit is Viewed

• Negative connotation

▫ Only looking for mistakes

▫ Witch-hunt: What did I do wrong?

• Change catalyst

▫ Change my position

▫ Create more work

How Change is Viewed

• Humans are creatures of habit

• Crossing arms

▫ Was it natural or was it awkward?

▫ Why?

▫ Did you notice a difference in how your brain processed the action?

How Change is Viewed

• Certainty brings clarity and predictability, whereas ambiguity activates a threatened response

• Not knowing what will happen next can be profoundly debilitating because it requires extra neural energy

Understanding Change Resistance

• Social Neuroscience studies how and which parts of the brain react to different types of stimuli related to social interactions

• Two overarching principles:

▫ Motivation for behavior is governed by the will to minimize threat and maximize reward

▫ Social needs are treated in a similar way as primary needs like food and water

The Brain and Change

• Fundamentally, our brains still boast the same physical makeup as our ancestors, although we do have a larger and more developed prefrontal cortex– the part of the brain that allows us to reflect and consider

• Back then, the brain had one key driver: survival

The Brain and Change

• Our brains are still subconsciously looking out for threats

• When the brain is presented with ambiguity or significant change, it goes into a threat response and reroutes energy to fight or flight

• The feeling of threat is also contagious

The Brain and Change

The SCARF Model

• Developed by Dr. David Rock, Director of the Neuroleadership Institute

• Describes five social dimensions that control our actions by creating a negative (feelings of threat) or positive (feelings of reward) reaction in the brain

• Activate reward responses and remove threat responses to motivate people to engage in change

The SCARF Model

The Five Social Dimensions

Status

• Relative importance to others

• It can be surprisingly easy to accidentally threaten someone’s sense of status

• When threatened, people may defend a position that doesn’t make sense, to avoid the perceived pain of a drop in status

Certainty

• Being able to predict the future

• When the brain doesn’t have certainty, it gets distracted as it tries to work out what pieces of information mean and whether they all make sense, building speculation and anxiety

Autonomy

• Perception of exerting control over one’s environment

• When one senses a lack of control, resistance is a way of exerting control over something in their environment

Relatedness

• A sense of safety with others

▫ Deciding whether someone is “in” or “out” of the social group; friend or foe

• The absence of safe social interactions, or meeting someone unknown, generates an automatic threat response

Fairness

• Perception of fair exchanges between people

• Unfair exchanges generate a strong threat response, to include displaying intense emotions such as disgust

Overcoming Personal Resistance

• Acknowledge the change

• Stop the fearful thoughts and replace them with something positive

• Be part of the change

• Communication, communication, and more communication

Overcoming Resistance as the Auditor

• Provide clear, specific explanation of objectives and expectations

• Eliminate “gotcha” auditing

▫ Include people in the process

▫ Build trust by being available for questions

• Increase transparency and communication

Adapting to Change

• There will never not be some kind of resistance to change

• Have to address the elephant in the room in order to effectively move forward

• Learn to roll with the punches

Summary

• Resistance to change is as inevitable as change itself

• Understanding how the brain interprets change will help to overcome resistance on a personal and professional level

• Never truly eliminate resistance, but it should be identified in order to press forward

Questions?