The increasing complexity of companies, combined with the impact of today’s global economy, has resulted in a variety new business risks and challenges. To help in responding to these new risks and challenge, it is essential for a company to have a highly skilled Chief Audit Executive (CAE). This CAE must possess several core characteristics which will allow him or her to be successful.
One clue to these characteristics can be found in the meaning of the word “Audit”, derived from the Latin word “audire” which means “to hear”. Successful CAEs hear what is happening within a company and also hear to what stakeholders have to say. Therefore, a successful CAE is one who not only technically solid but has appropriate behavioral characteristics. The mix of essential characterizes that should be found in a CAE is as follows:
1. Strategic Thinking
CAE plays an important role in providing assurance whether the organization has the ability to achieve its objectives or not. This means that a CAE should understand the company’s business and how he work together with top management to achieve a company’s strategy in order to and help guide the organization in the right direction.
2. Mastery of Risk
The CAE needs to establish risk-based internal audit plans to ensure that the priorities of the internal audit activity are consistent with the company’s goals. Accordingly, it is necessary to have a high sense of risk awareness and how the organization manages its risks; CAE should be also be aware of any emerging risks and understand the impact of changes in the industry or the external environment.
3. Leadership Ability
The CAE should have strong leadership skills which are demonstrated even beyond the internal audit department. The CAE should inspire, motivate, challenge the auditors to take greater ownership for their work. Empowerment is important to achieve high performance, without empowerment internal auditors cannot own their work and take responsibility for their results. Also, the CAE should have the ability to create new leaders for the organization; those leaders can drive the future of the organization.
The CAE can play significant role in driving the change in the organization and can be effective champion for innovation, by providing improvements in strategy and activity through promotion of innovation and awareness of emerging opportunities and risks. The competencies for critical thinking, innovation and improvement are very important for CAE to succeed.
4. Effective Communication
Listening to stakeholders and understanding their needs and concerns is vital for CAE role. Strong communication skills can help in building positive relationships with senior management and business leaders. Communicating issues accurately and prioritizing them is also important. Another important thing is using the right words in audit report which demonstrates professionalism of CAE and the audit team.
5. Desire for Knowledge
Knowledge distinguishes a leader from a non-leader. The CAE should be constantly alert to best practices, industry trends and inspire internal auditors to develop themselves, maintain a commitment to ongoing training and learning.
“If you want to be successful, you have to be willing to invest in yourself” Richard Chambers, CIA, QIAL President and CEO of The Institute of Internal Auditors
As the requirements of companies change, the required characteristics of a successful CAE will also need to change. CAEs have a big role to play in a company by helping an organization remain aware of and effectively manage its current, strategic and emerging risks. To be successful at this role, a CAE needs to have a combination of above characteristics mentioned above to allow him to add value to a company. In today’s world, it is absolute critical for a CAE to continuously upgrade his or her skills in order to meet the changing expectations of companies and the internal audit profession.
AYMAN ABDELRAHIM, MQM, CIA, CCSA, CFE is a Chief Internal Auditor at a government organization in Dubai..