Social media today… A large consultancy publishes a report regarding internal audit – sharks sense blood, and start circling around the profession. They have even prepared their writings for our gravestone as a profession, it seems. And everyone has the solution for “fixing” internal audit. There is a catch, though, they will charge you for the problem they believe you have.
But are we really done as a profession? Are we even in a crisis? There is, after all, a global internal audit body that can measure these metrics for us. And it would not charge us for it. As all professions, we evolve, we adapt, but we are far from over.
A wise man once told me – follow the money. Who has what to gain by what is going on now? What is the motive in this triangle? I would not go as far to call it the fraud triangle, but someone is hoping to cash in on it…
Bear with me for the next three paragraphs, I will depart from this discussion to make a point.
I remember a published article which stated that there is no connection between the vaccinations, and autism in children. The article was used to promote vaccination and debunk the fears over the practice. As I know people whose children have developed autism following the vaccine in question. I decided to click on the link and read the full report. It was a long report, but I had the spare time, and read it through. Near the bottom – an objectivity/conflict of interest statement. “The doctors x,y and z work for the ABC pharmaceutical company”.
Hmm… Interesting, I thought to myself. Let me google this company. ABC is owned by DEF. Let’s google DEF… Turns out they have paid hundreds of millions of dollars to settle out of court and close various claims and legal suits against them. Cases for misleading the public right there in the media.
So, I think to myself: “Would I trust this company, with its history?”, DEF has everything to gain by a positive report, and the professionals doing the report are on their payroll (via ABC, smart move). They have been fined for misleading the public already. Has anything changed now? What about the people I know, who suffer the consequences? Why would they lie to me? And what are they for DEF? A statistical error somewhere in the data, probably. But even if 1% suffer, does that make it ethical? Does a corporation equal God? Can a corporation decide to negatively impact the lives of thousands, as their medicine is “good enough”? What about the doctor that prescribed chemotherapy for people who did not have cancer? He benefitted financially from ruining lives. And people trust doctors by default… And consultants…
Back to our Apocalypse… Like I said, in the age of social media, click baiting seems to be everything. Sensational news sell, and suddenly everyone is an expert. And no one listens to the actual voice of the profession, the IIA.
So, let us say, for the sake of argument, that a corporation has just paid billions of dollars to settle out of court. Imagine there was an article in the news about it recently. And imagine they tell you, your profession is declining, is in danger, and they can help you out. Use their “magic pill”, the solutions you would be charged for.
You can grab the bait… Or, you can listen to what the profession has to say about it. Read IIA reports, publications, blogs, network on conferences, obtain insights from your colleagues, from your own experience. Leave your cave, and interact with the stakeholders. What keeps them up at night? What do they need our help with? Be the water-cooler internal auditor and mingle with employees to feel their pulse, understand their fears.
I am not saying our profession is perfect, far from it. But is external audit perfect? Were there not a number of scandals in the past? What is the level of satisfaction of their clients? I can only assume very high, as companies are paying for the report, and I have yet to see a negative external audit report. Oh, the things I’ve seen. But that is a different topic altogether, I shall tackle those ethics some other time.
I am now a consultant. I have crossed the river to the other side, I have so far criticized in this article. But one thing I would never dream of doing, is inventing a problem for a client, in order for me to fix it for them. While internal auditors should strive to become a trusted advisor – and tell that to the manager who missed a promotion, or was penalized, or lost a job due to some of our disclosures, you would probably find his opinion in a poll somewhere – so should the consultants. If you want me to hire you, you’d better be level with me. And do a research for a subject which cannot bring you extra revenue, or expand a market. If you cannot do that, at least hire the IIA to validate the research you have done for their profession. You owe us that much, after all, you are offering internal audit services to clients yourselves.
As for internal auditors, we have a lot of work to do:
- From educating boards, managers, and more importantly students on what internal audit is. If you expect a healthy skin from a spinal surgeon, you cannot blame him for your expectation gap.
- Educating human resource professionals and recruiters – how many vacancies are out there, where the internal auditor is expected to be a CPA or ACCA? How many organizational charts where the internal audit reports to the CFO? Is there even a requirement for the candidate to be a member of the IIA? Would you hire a lawyer who is not part of the legal chamber?
- Educating politicians and legislation bodies – how many laws are out there for internal audit which completely disregard the IIA, and even promote external auditors for internal audit positions? I am talking developing markets here, countries where the profession is relatively new.
- Educating internal auditors – mingle with your clients. Get to know what they feel, establish a relationship. You are not a police officer who is there to put them in jail.
- Rigorously enforce the code of ethics – there are bad apples, for sure. I have witnessed a few of them in action.
But, do not despair, no need to be discouraged. It is a natural evolution of a profession. Frankly, if someone asks me, we are doing a tremendous job We are juggling assignments, managing expectations, investigating frauds, helping companies improve their processes, management of risks, governance, and saving a lot of money while we are at it.
While managing our relations with the clients, I may add. By definition, people do not like being audited. Unlike external auditors, we do not do a “hit and run” once a year, but we stay here and face the fallout from our work, in terms of relations. Are we pressured to alter findings? – Yes! Of course. It is in the nature of our work. Some people even criticized the profession over this online. We are not the ones doing the pressuring. What we do is we stand our ground. And if we lose our job over it, so be it. You can get a new job, you cannot get your integrity back.
By definition, an internal auditor is someone who prefers to work in the background, and someone that digs into those papers, contracts or documents that no one wants to read. An internal auditor would not be the one to brag his achievements, so we are mostly left with this skewed perception of reality, that our profession is in danger, or that it is not doing a good job. Mostly from external sources.
That does not mean we do not have our “battle” stories to tell. Maybe we effected savings that cover the internal audit budget for the next 100 years or so. Maybe we detected some major fraudulent practices. Maybe we alerted the board on some critical risks that later turned out exactly like we predicted. Maybe we helped implement a major new improvement via our consulting engagements.
The IIA might do well to think of a way to highlight some of the tremendous achievements our colleagues are doing. While protecting sensitive information, of course.