Internal audit is becoming increasingly significant. Auditors are responsible for giving independent assurance about the effectiveness of an organization’s risk management, governance, and internal control mechanisms. They can give monitoring that extends beyond the financial ramifications, looking at the whole operations of the firm, including reputation, employee treatment, and environmental effect. When working in an open and collaborative atmosphere, auditors have the chance to give strategic insights that can move the firm ahead in addition to identifying issue areas.
However, in many firms, open cooperation does not occur—there is a gap between the internal audit function and the rest of the business. In that circumstance, auditors lack visibility within the business and are frequently excluded from crucial strategic decisions. They may not always have access to the data they require to provide reports and strategic suggestions. They’re left in the dark, and the rest of the corporation may regard them as an annoyance rather than a strategic partner.
The following are five excellent approaches for auditors to close the gap:
1. Create Alignment with Stakeholders Throughout the Business
A lack of continuing communication (45%), mistrust of internal audit by business units (22%), and a lack of clear lines of process ownership (21%), according to almost half of poll respondents, is the most significant impediment to developing alignment between internal audit and business operations.
Many businesses do not properly identify roles and duties, and divisions do not interact enough to grasp goals, resulting in misunderstanding and duplication of effort between departments.
However, some auditors have devised novel solutions to these problems. Dan tells the example of Deb, an auditor whose process teams battled with communication. It was the first time everyone had been in the same room in three years, so she decided to throw a pizza party for all of the teams.
They reviewed their respective responsibilities in the audit process and began freely discussing how to work together to solve difficulties throughout the gathering. Deb made the pizza party a quarterly event that focused on issues affecting their day-to-day operations since it was so popular. The company experienced a significant boost in worker cohesiveness, and audits began to run more quickly and efficiently. Deb has since been promoted to operations manager.
While a pizza party isn’t always possible (particularly during a pandemic), look for methods to bring diverse roles together in a relaxed roundtable atmosphere. Organize an online session and invite a guest speaker to speak about a current regulatory topic that your team members will find interesting. Consider using your intranet or a knowledge-sharing platform on a regular basis to ask and answer questions across departments and to stimulate continuing dialogue. By fostering a collaborative culture across all process teams, you will be able to quickly exchange insights and enhance the audit process for everyone involved.
2. Improve the Three Lines of Defense (3LoD) Model Using New Audit Tools
Auditors should be on the front lines from the start in today’s highly regulated environment, collaborating with risk management and compliance teams to develop a strategy for analyzing and managing company risk. However, auditors frequently struggle to get their voices heard.
The solution is to be creative. In one case study, credit risk review officer Scott sought to demonstrate the importance of his division to the firm and help other teams comprehend the auditing process. To do this, he persuaded management to make all new loan officers spend their first 30 days working in credit risk review. This offered them a new perspective on the business function by allowing them to observe what the audit team performed and how they did it. He was also in charge of instructional programming, such as quarterly workshops and a biweekly newsletter. The newsletter became so popular that the commercial lending team took ownership of it, giving the credit risk evaluation function new respect and recognition.
Auditors might seek out novel ways to deliver their knowledge, such as newsletters, seminars, movies, or graphic presentations, or even interactive websites. By providing several channels for knowledge consumption to business units, you may make the audit team more relevant and engaging to the organization.
3. Expand Analytics to Gain More Timely Risk Insights
Auditors must do extensive analyses. They can assist us in better understanding processes and data flow, developing better audit programmes, and improving the value proposition of internal audit to the company. However, business departments are frequently hesitant to share their data with the audit team.
Auditors, on the other hand, can broaden their access to data by making an attempt to be of benefit to business departments. Dan uses Stephanie as an example, a senior auditor with great Excel and PowerPoint abilities. Stephanie offered to assist a business function manager who wanted to deliver a presentation to the board but didn’t know how to drill down into the data to gather the information she required or how to present it effectively. She worked after hours to collaborate on the presentation.
Stephanie was brought into the board meeting on the day of the presentation to be recognised for her contributions and thanked for her efforts. Stephanie was then able to gain access to the data she required for her position on the auditing team.
To acquire access to data from other business units, consider how you might leverage your talents to assist them and develop trust across teams. Better teamwork will allow you to have access to the information you require to ensure the success of both teams.
4. Improve Your Communication Skills In collaboration with the C-Suite
Many auditors discover that the C-suite does not appreciate the internal audit team. They believe that auditors are only there to review controls, and they want the audit team to continue doing things the same way they have always done them. In many situations, the team has not stated clearly how they contribute value, or has struggled to develop methods to add value. All of this contributes to low engagement among leadership and audit teams.
How can we avoid this? Concentrate on greater education and communication about what you do. Dan knows one auditor who started giving the C-suite a regular audit “snap”: a one-pager with the audit plan’s progress, a success story about how a business function applied audit’s recommendations with positive outcomes, and an opinion piece on policy, risk, and controls. The auditor started receiving regular feedback from the board and top management, as well as invites to board meetings and sessions where her input was sought. You may demonstrate your worth and become a part of the dialogue with your C-suite by giving thought leadership in your sector.
5. Establish yourself as a strategic partner by providing data-driven information.
Finally, one of the most effective strategies to boost internal audit’s brand is to serve as a strategic consulting partner to lines of business. This allows you to promote your team’s talents, show audit’s work in a more collaborative light, provide business units a cause to contact audit, and create new methods for audit to add value.
For example, once COVID-19 went into effect and firms were required to drastically change their processes, certain audit teams were able to take on additional roles in risk assessment, making strategic advice for implementing new standards. Make it obvious that your audit team is capable of doing whatever is required to assist, even if it goes outside of standard job categories.
Audit teams can also provide continuing advising and consultancy services to business units, utilizing their skill sets as auditors to provide business teams with strategic assistance rather than focusing just on compliance. For example, one audit team was able to launch a consulting practice concentrating on data risk management, delivering suggestions and an action plan to the business unit. The management team was so pleased with this strategy that it invited the audit team to help in additional areas, saving $500,000 in outside consulting expenses.
The audit function frequently suffers from a lack of communication with other lines of business; however, by making a concerted effort to foster cross-team collaboration and demonstrate their value to the rest of the organization, as demonstrated in the examples above, audit can generate new respect and authority within the organization. You will be able to conduct better risk analysis and audits if the audit team’s voice is heard throughout the process. This will improve the organization’s overall performance.
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