A veteran chief audit executive and a technical specialist join forces to showcase innovative professional development programs for internal audit
A fundamental role of internal auditors in the twenty-first century is to add value to the business and help it achieve its objectives. At the same time, employee talent management has become a priority, as stakeholders recognise that internal auditors need to understand the business. This article focuses on ten developmental programs across three tracks (illustrated in Exhibit 1) that can be structured to close skill-gaps and provide the internal audit activity (IAA) with practical insights into the business.
“There is broad diversity of need for technical and soft skills and a need for internal auditors to operate at a sufficient level of competence to show the value of the profession.” IIA Global Council 2014
Leaders of our profession have clearly spelt out the importance of talent management:
• Thinking strategically to reduce the talent gap was emphasised in the IIA’s ‘Tone at the Top’ newsletter in January 2013. The article also noted the need to support professional development and encourage staff to work collaboratively with other business units to promote cross-pollination of knowledge.
• Skill-set gaps was identified by delegates at the IIA’s Global Council meeting held in Dubai in 2014 as one of the top five obstacles the profession faces through 2020.
• Understanding business was identified as very important by over 70% of respondents to the IIA’s 2010 global survey. This was the highest rated of 18 technical skills.
• Maintaining compliance with professional auditing standards underpins audit value, with ‘proficiency’ and ‘continuing professional development’ emphasised in standards 1210 and 1230 respectively (ie possess and/or enhance knowledge, skills, and other competencies).
• Maximising individual potential is a key to being an employee of choice. It helps to create a highly satisfying place to work, and improves the intellectual capital within the IAA.
• Keeping internal audit fresh and up-to-date through effective audit leadership. In a June 2014 blog, the IIA President and CEO Richard Chambers emphasised the importance of audit leaders being role models, focusing on positives, being goal-oriented, making the time for the team, and getting help from others through effective delegating. Implementation of professional development programs is another leadership imperative.
“Tell me and I’ll forget; show me and I may remember; involve me and I’ll understand.” Chinese Proverb
• Identify the competency needs of your IAA. These may already be identified through an the IIA’s Global Internal Audit Competency Framework or within a defined IAA Professional Development Plan.
• Determine any related development programs that your entity already has in place. For instance, well-established graduate and mentoring programs exist in many entities.
• Assess the best options for tailored development programs that suit your IAA. From the ‘program overview’ table, select one or two programs to implement now, and others that might be beneficial in the future.
• Develop the selected programs for your IAA, building up from bottom of the ten building blocks in Exhibit 2.
Recognise that motivation and state of readiness to learn are important considerations in identifying the ‘right’ participant/s.
• Finally, irrespective of which program is chosen, ensure that fresh ideas and insights are generated for the IAA. This is the critical ‘payback’ phase.
Bringing Business People into Audit
Program 1 : Graduate Program
Design Aims : Introduce governance, risk and control fundamentals to entity’s graduate program participants.
Primary Benefit : Helps shape career of potential future leaders, through experiential learning.
Secondary Benefit : Brings youthful enthusiasm into IAA. Builds ‘ambassadors’ for IAA through a good experience.
Key Features : Provides graduates an IAA rotation to deliver practical insights on auditing, and holistic appreciation of core activities of entity.
Program 2 : Guest auditors – for specific engagements
Design Aims : Draw guest auditors onto specific audits where their technical skills are needed.
Primary Benefit : Delivers subject matter experts from technical business areas to IAA to bring expertise to particular audit engagements. Example: a Western Australian mining company utilised engineers to great effect.
Secondary Benefit : Runs for shorter duration than other programs, and is informal and less structured.
Key Features : Allows guest auditors to assess specific components of audits, rather than experience whole audit process.
Program 3 : Guest auditors – longer term secondments
Design Aims : Leverage expertise of business staff.
Primary Benefit : Drives audit improvement strategies through technical advice on audit planning, fieldwork or reporting.
Secondary Benefit : Brings in a ‘free’ expert resource.
Key Features : Facilitates secondment of operational staff from business areas to IAA for defined periods (several weeks or months).
Program 4 : Middle management rotation program
Design Aims : Build capability of middle managers, whilst drawing business experience into IAA.
Primary Benefit : Helps management by giving high potential middle managers opportunity to learn first-hand about entity-wide governance, risk and control arrangements.
Secondary Benefit : Facilitates two-way learning. IAA gains services of respected business people to work on audits. Helps to build business acumen in auditors.
Key Features : Delivers longer term learning benefits for future executives through structured program; CAE partners with ‘C-suite’.
Delivering Inhouse Programs
Program 5 : Alumni Network
Design Aims : Invite alumni to IAA events to provide insights on direction, planning and strategies of IAA.
Primary Benefit : Uses structured approach to leverage rich source of ideas, insights and perspectives that former internal auditors have gained in their new roles.
Secondary Benefit : Achieves ‘progress through sharing’ for professional counterparts.
Key Features : Provides basis for ‘staying connected’ with experienced auditors who move into other parts of business or to other entities.
Program 6 : Knowledge champions
Design Aims : Nurture mid-level audit staff to become knowledge champions.
Primary Benefit : Auditors develop expertise in assigned specific knowledge areas, such as emerging practices and issues; governance, risk, control; or technical areas of entity. Example: tax collection agency CAE might assign indirect taxes, direct taxes, client register etc.
Secondary Benefit : Provides CAE with timely information on contemporary trends and business issues, and to be well-briefed for ‘C-suite’ and audit committee interactions.
Key Features : Reduces dependency on hiring terrain experts.
Program 7 : Mentoring
Design Aims : Achieve full potential of auditors.
Primary Benefit : Fosters professional relationships, where auditors have opportunity to collaborate and share insights
with experienced executives outside IAA.
Secondary Benefit : Provides forum offering constructive and frank advice to support auditor’s career development.
Key Features : Offers cost-effective way of assisting auditors to acquire knowledge and skills to operate within challenging environment.
Sending Auditors into the Business
Program 8 : Frontline connections
Design Aims : Enable senior audit staff to spend time in field with operational staff.
Primary Benefit : Provides an opportunity for auditors to gain experience ‘on the ground’ so they better comprehend frontline activities and day-to-day challenges of entity.
Secondary Benefit : Provides job enrichment for participants so they remain sharp and objective.
Key Features : Enables auditors to spend half a day every month or quarter in the business shadowing frontline staff and completing lower-risk operational tasks.
Program 9 : Secondments within the entity
Design Aims : Provide a short break from auditing to refresh key staff.
Primary Benefit : Refreshes knowledge of seasoned auditors across business operations, and enables them to experience day-to-day operational pressures.
Secondary Benefit : Showcases to management the talent within IAA, and helps to further build IAA’s professional profile.
Key Features : Facilitates targeted secondments within business areas.
Program 10 : Swap or secondment with another entity or service provider
Design Aims : Boost breadth of experience of high potential auditors.
Primary Benefit : Enables auditors to gain experience in another entity or service provider and bring fresh insights back to IAA.
Secondary Benefit : Reduces risk of auditors becoming stale and resigning, by enabling them to gain broader experience and build their career path.
Key Features : Provides swap of high-potential auditors or secondments for pre-determined periods (say, three months) to achieve defined experiential learning objectives; established through mutual agreement of CAEs.
“The best minute I spend is the one I invest in people.” Kenneth Blanchard
Well-structured professional development programs can help shape a legacy that goes beyond the outcomes traditionally expected of members of the internal audit profession. In particular:
• The CAE creates a highly satisfying place to work, which helps to attract and retain excellent staff.
• The value of internal audit is enhanced in the eyes of the entity’s most senior executives (commonly called the ‘C-suite’) and the audit committee, through practical insights gained by drawing business-based expertise into more complex audits.
• The IIA as a whole benefits by improving its intellectual capital and expertise; building on the overall talent at its disposal; and enhancing its credibility through technically strong outputs. Programs interfacing directly with the business have the added benefit of showing the ‘human face’ of internal auditors.
• Business specialists brought into the IAA benefit from the insights that they gain in respect to corporate governance, risk management and internal control; skills which they will need as they move into future senior leadership positions. They are also influenced to become ‘ambassadors’ for internal audit.
• Auditors placed into the business or involved in in-house programs gain job enrichment; build their skills; gain greater understanding of the business; and take steps to maximise their individual potential.
BRUCE TURNER, CGAP, CRMA, CFE, CISA, PFIIA, FFin, FIPA, MAICD, FAIM is an audit committee chairman in Australia and Chairman of the IIA-Global Public Sector Committee.
JACQUELINE TURNER, B. LJS, GradCertFraudInv is a white collar crime analyst at a multi-national financial services institution in Australia.