IT Audit

A Guide to Conducting a Successful Internal Audit Kickoff Meeting

Posted by External Dev | August 18, 2023 | Audit Career Trends, Auditor jobs, careers in audit, CIA Recruitment, ESG, Fraud Audit, Internal Audit, internal audit objectives, internal audit process, IT Audit

Audit International know the common expression, “you only get one chance to make a good first impression.” For internal audit, this chance often comes during the kickoff meeting. This introductory meeting will often set the tone for the entire audit. Its primary objective is to align the auditors and auditee on the audit’s scope, objectives, timeline, and expectations. The meeting provides an opportunity to establish clear lines of communication, clarify roles and responsibilities, and build rapport between the audit team and the auditee.

Here, Audit International will provide a step-by-step guide on how to conduct an effective internal audit kickoff meeting, highlighting its importance, objectives, key participants, and necessary preparations.

Preparing for the Internal Audit Kickoff Meeting

There are several steps internal auditors can take to prepare for the kickoff meeting. They include:

Define the Audit Objectives: Clearly articulate the purpose and goals of the audit. Identify the specific areas or processes to be examined and the desired outcomes.
Determine the Scope: Define the boundaries and limitations of the audit. Specify the time frame, departments, locations, or functions to be included.
Assemble the Audit Team: Select auditors with the relevant expertise and knowledge. Assign roles such as lead auditor, documentation reviewer, and subject matter experts as necessary.
Conduct Pre-Meeting Research: Familiarize yourself with the auditee’s processes, policies, and applicable regulations. Review previous audit reports, findings, and corrective actions.
Prepare an Agenda: Outline the topics to be discussed during the meeting. Allocate sufficient time for each agenda item and prioritize critical issues.
Send Invitations: Distribute meeting invitations to the key participants, including auditors, auditee representatives, management, and any other relevant stakeholders. Provide the agenda and any reading materials.

The Internal Audit Kickoff Meeting Process

If you have prepared well for the kickoff meeting it should go smoothly. Keep in mind that auditees may have some anxiety about the upcoming audit. They will often have preconceived notions that they audit may be an exercise in the internal auditors trying to play “gotcha!” It’s important to alleviate these fears and clearly communicate the purpose of the audit.

They may also have concerns about the schedule of the internal audit work and see the audit as a distraction from their day-to-day duties. Indeed, we all have busy schedules and they may view the audit as providing extra work on top of their already full days. For this reason, it’s also important to be transparent about the scheduling of the audit work and to work to make the audit as painless as possible for the process or unit that is being audited.

The following are some steps to take during the kickoff meeting to help allay these fears, set expectations, and communicate clearly to the auditees:

Introduction and Opening Remarks: a. Welcome all attendees and introduce yourself and the audit team members. b. State the purpose of the meeting and the audit’s importance to the organization. c. Outline the meeting’s agenda and expected outcomes.
Review of Audit Objectives and Scope: a. Present the audit objectives, scope, and expected deliverables. b. Provide an overview of the audit methodology and explain any unique approaches or tools to be used. c. Discuss the audit timeline, key milestones, and any dependencies.
Roles and Responsibilities: a. Clarify the roles and responsibilities of the audit team members. b. Define the roles and expectations for auditee representatives, including the provision of requested documentation or information.
Communication and Information Sharing: a. Establish channels and protocols for communication throughout the audit process. b. Discuss the frequency and format of progress updates, status meetings, and any interim reporting requirements. c. Specify the confidentiality of information shared during the audit and any data protection measures.
Document Review and Access: a. Discuss the documents, records, or systems that auditors may require access to during the audit. b. Explain the need for auditee cooperation in providing necessary documentation promptly. c. Address any concerns regarding sensitive or confidential information.
Q&A and Discussion: a. Provide an opportunity for auditees to ask questions or seek clarification. b. Encourage open dialogue and address any concerns or challenges raised. c. Seek input from auditees regarding specific areas of focus or potential risks.
Closing Remarks: a. Summarize the key points discussed during the meeting. b. Reiterate the importance of cooperation and commitment from all parties involved. c. Establish the next steps and confirm any follow-up actions or meetings.

Post-Kickoff Meeting Actions

Congratulations, you’ve conducted a great internal audit kickoff meeting. The internal audit team and the auditees are now on the same page and everyone knows what do expect during the audit. The initial work involving the kickoff meeting isn’t done, however. To set the upcoming audit on the right path there is still some work to do. Post-kickoff meeting activities include:

Documentation and Reporting: Document the meeting minutes, including the key discussions, decisions, and action items. Distribute the minutes to all attendees for review and confirmation.
Follow-up Actions: Assign responsibilities for any action items identified during the meeting. Set deadlines and establish accountability to ensure timely completion.
Ongoing Communication: Maintain regular communication with auditee representatives to address any queries or provide clarifications as needed. Share progress updates and adhere to the agreed-upon reporting schedule.

Conducting a well-executed internal audit kickoff meeting is a crucial step towards a successful audit process. It establishes a foundation for effective communication, collaboration, and understanding between auditors and auditees. By clearly defining the audit objectives, scope, roles, and responsibilities, the kickoff meeting ensures a focused and efficient audit process. Preparing adequately, following a structured meeting agenda, and documenting the discussions and action items contribute to a productive engagement. By leveraging the guidance provided in this article, organizations can maximize the value derived from internal audits and drive continuous improvement within their operations.

If you have executed the kickoff meeting well, the auditees will be all smiles when you arrive to conduct the actual audit.

Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc. across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
Calling
– Switzerland 0041 4350 830 59 or
– US 001 917 508 5615
E-mail:
– info@audit-international.com

What the Audit Committee Really Wants from Internal Audit?

Posted by External Dev | July 21, 2023 | Audit Career Trends, Audit Salary, Auditor jobs, careers in audit, ChatGPT, Chief Audit Executives, CIA Recruitment, Data analytics, ESG, Fraud Audit, FTSE 100 companies, Internal Audit, internal audit objectives, internal audit recruitment, IT Audit, Risk Audit

Audit International realise that for many internal auditors, the audit committee is a bit of an enigma. Most of you help the chief audit executive (CAE) or other internal audit leader with materials and content to provide to this subgroup of the board of directors. Much of your work, in summary fashion, ends up there. But, for the most part, we only know what happens behind the closed doors of the boardroom if your CAE conducts a post-meeting debrief. Yes, we know that the audit committee is important. We know that they take our work seriously. But what do they really want from us?

For internal audit leaders themselves, the meetings can be intimidating. The majority of audit committee members are experienced executives from other companies and often serve on other boards. They are generally savvy, informed individuals, who spend a part-time role executing governance duties for the organization where we work. So, while they might, at times, be proactive—meaning, they raise questions or lines of inquiry based on something they initiate—mostly they are reactive, responding to what is presented to them. That means the onus is often on internal audit leaders to help them in their role by carefully choosing what to share with them.

Yet walking the fine line between providing too much detail and maximizing the little time we have with the audit committee can be tricky. Internal audit leaders often express anxiety about meeting with the committee. It can be difficult to anticipate what they may find important versus what they would consider a waste of time. Indeed, internal auditors can be forgiven if they just want to shout the famous Spice Girls refrain: “Tell me what you want, what you really, really want!” So, let’s give that a try: What does the audit committee really, really want?

First, What the Audit Committee Doesn’t Want

During an Internal Auditors career, you report functionally to an audit committee on separate occasions, with different companies. You might foolishly think that you would give them lots of information and let them decide what was important. It’s a trap that is easy to fall into. It takes time, experience, and some good mentors to gain the wisdom to realize that is absolutely the wrong tactic.

It is an evolutionary process to slowly realize that reporting to the audit committee is not about what you want to tell them. It’s only about what they need to know. To cite an often-used phrase: “be brief, be insightful, and be gone.” Keep it short, share the needed knowledge, and let others take their place on the agenda. It’s not about you; it’s about your audit committee members.

What the Audit Committee Does Want

Here are ten things that Audit International have learned that the audit committee of the board wants from internal audit. We hope they work for you when it is your turn to directly interact with the audit committee.

1) The essence of the quintessence: This phrase, “the essence of the quintessence,” was shared by a chief operating officer of a bank once, and it stuck with us. Basically, he was expressing that he and the other execs were busy folks and they want to get right to the bottom line. Don’t just tell me what you are telling me, but tell me why you are telling me. Get to the essence of the quintessence! And that’s what the audit committee wants too! So, if you feel you really must share something with the audit committee, ask yourself why it is so important that they know it. If you can start your phrase with, “this is important because …,” then they probably need to know it. They want the bottom line and the why. The rest is superfluous.

2) Not how you did something, but what you concluded: Have you ever asked someone how their vacation went and they start by telling you about the car ride to the airport? You are being polite, but all the while you wish they’d just answer the question. You want to know about the experience at the destination, not how they got there. Well, the same is true with the audit committee. All the work we did to arrive at our conclusions is important to us, but not to them. They only want to know the conclusion. So, cut to the chase. They trust you did all the right work to get there.

3) Your opinion, not just the facts: Internal auditors follow standards, confirm everything, and don’t spout wild, unsupported views on subjects. We are methodological in our pursuit of facts and the truth. So, when we have made a conclusion, we are usually armed with supporting facts. If not, we tend to refrain from going out on a limb with an opinion. Resist the urge, however, to stick only to the facts. You are not a robot; you are a person with a brain. You have a range of experiences to draw upon and see more of the organization than most anyone else. So, does the audit committee want a Joe Friday, “just the facts ma’am,” approach? Not really. They trust you have done the work and want to hear your views on various topics. If they ask your opinion, trust your instincts and give it to them. If you don’t, you really aren’t adding as much value as you can.

4) Your concerns, audited or not: Whether you are new to an organization or have been there for many years, your well-honed internal audit skills will leave you with an innate ability to have concerns about certain things, whether you have actually done internal audit work on the topic or not. If you had unlimited time and resources, you’d go check out all those nagging worries, and confirm or deny them. But you don’t. The audit plan may not have prioritized it, but that doesn’t mean the concern isn’t valid.

Now, the audit committee has no desire to hear lots of speculation or theories, nor are they interested in trivial things. But, believe me, if you have a good relationship with the audit committee, they want to hear your top concerns, even if you don’t yet have all the facts. You just need to be extra careful in how you position what you say, and you do so rather infrequently. But they do want to know. As they say, that’s why you get paid the big bucks.

5) Something of substance in executive session: One experience that is among the trickiest for a CAE to navigate is the executive session with the audit committee. During the typical executive session everyone who is not a board member leaves the room and the internal auditor meets with the audit committee alone. Over the course of a few years of executive sessions with the audit committee, I can say from experience that there are two things you never want to do: one is to have something to tell them in every executive session, and the other is to have nothing to tell them in any executive session. So, the goldilocks theory applies here, you want to strike the right balance. What to bring up, how to bring it up, and what you need to do both before and after you bring it up is a whole course in and of itself. It is an art, not a science. Don’t be trivial or cavalier about what you bring up. The audit committee wants you to bring things up, and they want them to be of substance.

6) Proof you really get the business and the strategic plan – Whether it is deserved or not, a common complaint by operating leaders and managers within many companies is that internal audit does not understand the business. The last thing you want is for the audit committee to second guess your conclusions. So, if you are confident that you know the business and the strategic plan (and you’d better be), let it show. It should show up in your audit plan, your priorities, and your explanation of internal audit’s observations and conclusions. Don’t risk having the audit committee doubt you. They want comfort that you know the business and are in lockstep with the strategic plan. Give them the confidence that you do.

Another point to make here is to remember that you are a businessperson. As we go about our internal audit work, we tend to put blinders on, as if the audit plan and the audit projects are the only reason for our existence. Of course, they are not. So, when we update the audit committee on what we are doing, what hat are we wearing? An auditor’s who happens to work for the business? Or a businessperson’s who happens to be an auditor? The audit committee wants the latter.

7) That you align with second line functions: Not always, but often the only way that second line functions (risk management, compliance, security, and others) coordinate and collaborate with internal audit is if internal audit (namely the CAE) initiates the coordination and takes a lead role in it. Apart from the added cost of redundant activities, the audit committee doesn’t want a bunch of disjointed terminology, reports, and conclusions coming from the various “risk and control” functions of your organization. They want you to coordinate and collaborate across the second and third lines. If they aren’t telling you that, they are telling someone else behind your back!

8) Courage: Like everyone else in the organization, days are always going to bring obstacles, difficult co-workers, things not going according to plan, changed schedules, broken promises, and other hurdles. But, more often than many other employees in other departments, you will from time to time be called on to summon up some courage. From an obstinate audit client that is making your job difficult to a senior audit client manager that is disagreeing with you no matter how right you are—not to mention fraud investigations, hotline accusations, and executives who are doing questionable things—you are going to come across matters that are so egregious that you must raise them, regardless of the consequence. They are, hopefully, rare, but if you are in internal audit long enough, those times will arise. They will require backbone and strength of conviction, and are not for the faint of heart. But guess what, that is exactly what the audit committee wants from you: a reservoir of courage and the ability to call on it when it matters most.

9) That you understand the politics, but are not political – All organizations are political by nature. Whenever people get together and resources are scarce, win-lose games happen. Corporate politics are a fact of life. As much as we’d all like to be apolitical and let the facts drive what the right answers are, if we don’t learn how to navigate the organization’s politics, we will not be able to get our jobs done effectively. Does that mean we need to use the politics to our advantage? Sheepishly, the answer is yes, but not in an underhanded way. It’s important to know who to talk to, about what, and when; how to position what you are going to say; who needs a heads-up on what; who are the influencers in the organization; and so on. We need to know all that and leverage it to our advantage. Our audit committee members are some rather experienced and savvy businesspeople, and they are also navigating the organization’s politics to do their governance jobs. So, yes, they do expect you to understand the politics to get your job done well and know how to report things to them with an understanding of how the politics works, but they also don’t expect you to be overly political.

10) That you know when you may not be objective: Objectivity is such an important tenet to what internal auditors do and how we do it that we need to be ultra vigilant and self-aware when there is a risk of our objectivity being impaired. Audit committees expect us to be self-aware of when our objectivity might be impaired, or even the potential appearance of it being impaired. So, park that ego, realize you are subject to your own biases, and be self-aware enough to advise the audit committee when your objectivity could be impaired. They expect you to do that.

Earning that Paycheck

Even though they may not tell you directly, take it from us that your audit committee wants you to: be brief, tell them only what they need to know, share your professional opinion, be open about your concerns, leverage executive sessions properly, understand the company’s strategic objectives and strategic plan, collaborate with the second line, be courageous, know the business, navigate organizational politics, and say when your objectivity might be impaired. Easy peasy. Well, not really. But, as we concluded, that’s why you get paid the big bucks.

How ESG will change who you work with

Posted by External Dev | March 10, 2023 | Audit Career Trends, Audit Salary, Auditor jobs, Big 4 Accounting firms, careers in audit, CIA Recruitment, Data analytics, ESG, iac recruitmeny, Internal Audit, internal audit objectives, internal audit process, internal audit recruitment, Internal Controls, IT Audit

A new focus for Audit International and our clients is ESG. But there is one thing all of us are perhaps not considering as much : ESG’s impact on the workplace.

Environmental, Social, and Governance (ESG) factors are changing how companies conduct business in many ways, including:

– New ESG or climate-related disclosure regulations to comply with, especially in Europe.
– The need to effectively identify and manage ESG risks (including compliance, financial, and reputational risks), and integrate them within the existing enterprise risk management framework.
– Bringing a host of environmental and social metrics at par with financial information, especially with regards to data quality. There is a growing need for investor-grade ESG data.
– Ensuring that ESG factors give you a competitive edge in attracting investors, customers, and talent.

But there’s another change brought by ESG that’s not getting enough attention: The effects on workplace interactions.

– Firms that ‘get ESG right’ understand that ESG isn’t the responsibility of only one person. You can’t simply appoint a Vice-President or Director of ESG, or just place ESG under the Chief Financial Officer or Chief Sustainability Officer.

– Also, different departments can no longer work in their own little world with occasional collaborative efforts across functions. The important changes brought by ESG will also bring fundamental changes to the workplace.

The ESG team :
ESG is a team sport. People from different departments will have to work together as part of a single team.

You may be in Finance, Legal, Risk, HR, EHS, Sustainability, Operations, IT, or Procurement, but now, in addition to your regular teams and colleagues, you will also be part of the ESG team.

And your company’s ESG team will play a critical role because strong ESG performance drives corporate performance.

This represents a significant shift because suddenly key employees will have to align with a new set of stakeholders. They will have to work together with colleagues they might not have worked with before, or even knew. Here’s a sample of the types of interactions to expect:

EHS will have to provide key metrics to Finance for combined financial and ESG (or non-financial) reports.
EHS will also have to show to Finance and auditors (internal or external) how they provide limited or reasonable assurance on the data.
Procurement will seek guidance from EHS and the Sustainability team on how to capture greenhouse gas emissions data to calculate Scope 3 emissions.
HR will be asked to provide more tangible metrics on DEIB to Finance for inclusion in the combined financial/ESG report.
Did you bring together key stakeholders across departments as part of your ESG strategy?

Have you recruited members of your ESG team yet? If this is a topic you are actively hiring for, then please get in touch with us here at Audit International to assist you with any hiring needs you may have.

Getting your 2023 career resolutions back on track

Posted by External Dev | February 3, 2023 | Audit Career Trends, Audit Salary, Auditor jobs, Big 4 Accounting firms, careers in audit, Chief Audit Executives, CIA Recruitment, Data analytics, ESG, Internal Audit, internal audit recruitment, Internal Controls, IT Audit

With one in five people pledging to pursue career goals and ambitions in their New Year Resolutions, Audit International have researched career experts advice on achieving these in 2023.

New Year, new (career) you! More than 20% of people toasted the start of 2023 with some form of New Year’s resolution and one in five of those pledged to pursue new career goals.
But with January now over, many of those good intentions may have already fallen by the wayside. If that sounds familiar, you’re not alone. In fact, people will typically ditch their ‘New Year New Me’ resolutions by the second week in January.

If that strikes a chord, don’t despair. Audit International has taken some insights from careers experts on their top tips on getting your career back on track.

Re-evaluate your current career choices :
For those with an established job, or who have taken time out of work to start and raise a family, it can be daunting to consider a new industry or completely change career path. However, it’s never too late to take your role in a different direction or re-enter education.

“If you’re looking to change careers in 2023, it’s important to evaluate your previous experience up until now. Consider which parts of your current or past job roles have brought you the most satisfaction or fulfilment, as this can help guide your new career path,”.

Adopt a continuous learning mindset :
Passing all of your exams is an amazing achievement, but that’s when the real learning starts. “Don’t assume you know everything now. Listen and ask questions and make notes and look things up. Every day is a school day!”

Work on your soft skills :
To get ahead in your career it’s also important that you develop soft skills that complement your technical prowess. “As part of your role, you will be expected to provide advice to clients and companies on any number of specific issues they may be experiencing, so developing strong soft skills including clear and concise communication, empathy, and the ability to make decisions to help resolve conflict will be key to your continued success.”

Develop a killer network:
Natural networking is everything. LinkedIn bombing everyone you think might be useful to you is annoying and will rarely achieve anything. Show an interest in everyone you meet and connect in a more genuine way. Try not to just focus on people you think are ‘important’.

Be authentic :
As an accountant, you are well-organised, a skilled number-cruncher and have a keen eye for detail. But as your career progresses and you become a team leader, you will need to focus more on management and people skills. If you get promoted to a management role without any formal training, it can be easy to act like the type of manager you’ve seen in the past. “People buy people, so be yourself, not the manager you think you should be”.

Focus on developing relationships :
Accountancy is a task-oriented job and it’s easy to get lost in the daily grind of completing tasks and hitting deadlines. But the real value you add as a manager is building relationships with staff and being an enabler and facilitator for the team. That means getting to know your colleagues on a personal level and understanding their strengths and capabilities.

Keep your eyes open for growth opportunities :
Don’t get bogged down in short-term deadlines and tasks. “These need to be done for sure, but you should also look more widely to find new areas of growth and challenges that can help you advance in your career”. That could mean studying for a qualification, taking on new responsibilities, or joining a cross-functional team. “Always look for ways to build your skills and contacts and your career will progress nicely.”

Don’t limit yourself to one area :
One of the best ways to elevate your career is by making sure you don’t limit yourself to just one part of the accountancy industry. “Gaining experience in a variety of roles – especially during the first few years of your career, as you decide the areas in which you thrive and most enjoy – will build your confidence and will provide you with essential skills that help boost your long-term career prospects”.

Connect with a mentor :
Regardless of where you are in your accountancy career, having the advice of someone more experienced than you can be invaluable. If you are unable to secure a mentor through work, it is also worth approaching people that you work with who could help you, or you could even look at joining an association that could pair you with someone.

Don’t put too much pressure on yourself :
It’s always good to be ambitious when it comes to your career and education, but avoid putting too much pressure on yourself when it comes to achieving all of your goals or training courses by the end of 2023. “Comparing yourself to others or putting pressure on yourself can lead to you feeling overwhelmed or burnt out. Take as much time as you need and find flexible options that work for you, especially if there are other important childcare or work commitments to take into consideration.”

Be ready to flex. Having a long-term career plan is great. However, things change and you will get frustrated if you can’t adapt or sometimes go with the flow.

Internal Audit Trends for 2023: Talent Demands, Escalating Risk Velocity, and More

Posted by External Dev | February 1, 2023 | Audit Career Trends, Audit Salary, Big 4 Accounting firms, careers in audit, CIA Recruitment, Data analytics, ESG, iac recruitmeny, Internal Audit, internal audit objectives, internal audit process, internal audit recruitment, Internal Controls, IT Audit, Risk Audit, SAP

There is currently a misalignment in the world of Internal Audit. As Richard Chambers and AuditBoard’s 2023 Focus on the Future Report reveals, there are key areas where significant gaps exist between risk levels and planned efforts. The ability to attract and retain top talent, macroeconomic factors and geopolitical uncertainty, and business model disruptions due to the evolving risk landscape were all listed as top concerns for major organizations, yet only 13-20% of businesses have meaningful plans to devote substantial resources to these issues. Internal audit teams need to be ready to identify and address this kind of disconnect to ensure that their organizations are positioned for success in 2023. In this article, Audit International will identify three top internal audit trends, the challenges they present, and how internal audit teams can leverage software solutions to deploy team resources strategically against the most pressing concerns — setting themselves, and their business, up for success.

Trend 1: Velocity of Risk and Technology Change
Teams must continually provide assurance while adapting to evolving risks, digital disruption, and regulatory changes. Today we’re seeing significant contributions from the digital revolution, climate change, and stakeholder expectations, as the speed of decisions, the amount of connectivity, and the availability of data have all increased. Companies are learning that they have to balance pressures regarding what’s coming from governments, investors, and society as a whole. Stakeholders expect companies to act legally and with a conscience, and regulators are focusing on things like climate change, data privacy, and security.

Challenges in this area hit in numerous ways. First, there is an expanded purview required from emerging technologies and related risks. Second, there are repeated shifts to audit scope that put new burdens on teams. Third, there is an increased depth and breadth of data that brings along associated issues — including data reliability, related required team efforts, and resource constraints.

Technology can help audit teams develop solutions for these issues. Audit planning software accelerates risk and change responses from teams. With this preparation, teams can create risk-based audit plans with risk metadata to allow for efficient execution and continuous assurance.

Trend 2: Growing Internal Audit Talent Gap
Staff shortages, changing attitudes towards work, and a pre-existing skills gap are increasing talent risk and influencing how internal audit teams approach their work. Many teams are reporting that they are losing talent and struggling to replace them. Meanwhile, for the remaining team members, expectations are growing. They want to do more, and we need to keep them engaged. We have to support the folks that we have and give them opportunities to work in cybersecurity, sustainability, and other areas of interest.

The challenges created by the talent gap are as expected. Due to greater cost-cutting and efficiency demands often put in place by organizational leadership, teams are being asked to do more with less as headcount may be frozen or cut. There are the aforementioned difficulties retaining people and improving their skills, plus there are increasing specialization and training needs for team members.

A technology solution in this area is software with resource planning capabilities. This can help teams manage, optimize and retain talent by deploying resources more strategically, and it allows teams to improve individual and overall skills, efficiency, and experiences.

Trend 3: Align With the Business Objectives
The highly competitive corporate landscape and economic disruptions are driving the internal audit profession to refocus efforts on improved strategic alignment. Richard Chambers speaks often about auditors needing to become agents of change. When contemplating initiatives like cybersecurity, diversity, equity, inclusion, and third-party risk management, executive teams and audit committees all want better strategic alignment from internal audit teams. Internal audit must understand and embrace stakeholder needs and challenges so that we can better support their strategic initiatives.

The challenge for internal audit teams in this area is aligning audit with business priorities, which isn’t always as simple as that might seem. Plus, there is an increased requirement to validate internal audit resources. We have to start thinking in new ways, provide more value propositions, and be able to deliver more in less time.

The Seven Worst Words Internal Auditors Use

Posted by External Dev | January 25, 2023 | Audit Career Trends, Audit Salary, Auditor jobs, Big 4 Accounting firms, Chief Audit Executives, CIA Recruitment, Data analytics, ESG, Internal Audit, internal audit recruitment, Internal Controls, IT Audit, Risk Audit, SAP

Let’s face it. Even here at Audit International, we understand Internal audit still suffers from some rather negative stereotypes. There are plenty of companies or units where internal auditors are not welcomed with open arms. Audit clients may view internal audit with suspicion, expecting a “gotcha” mentality or may feel like they are under surveillance.

Sure, it’s often undeserved and some of it comes with the territory, but we may even be perpetuating such negative views with the words we use. Words and phrases that internal auditors consider just a normal part of the profession’s vocabulary may actually be words that trigger negative reactions in our audit clients. And often, internal auditors don’t realize they are contributing to the hostility by using them.

Words matter and good internal auditors choose them carefully. But auditors are also as prone to using professional jargon as anyone. These are words that have become so commonplace that we might not think too much about what they really mean, especially to others. We all use them. Yet, how they might be interpreted may not be how we intended. So, what can we do about it?

Here are seven words that we should consider their meanings more closely and either use them more carefully or strike them from our vocabulary completely.

1. “Finding”
Most internal auditors call what we consider reportable (in writing and verbally) a “finding.” Think about that for a moment, though. It’s not as if the vast majority of our audit observations were hiding or lurking in some hard-to-discover, dark and foreboding place, and it took our best Indiana Jones skills to unearth them. Lo and behold, ah ha! We have a “finding.” The word relates a context of sleuthing and uncovering things that were hidden, perhaps intentionally.

So put yourself in the shoes of your audit clients. We come along and have all these “findings,” as if they weren’t doing their jobs and it took us to find these gems of reportable conditions. Worse yet, we are often reporting as “findings” what audit clients told us directly. How would you feel if someone walked through your house and told you at the end of their visit that they found the carpets needed vacuuming, the furniture needed to be dusted, and relayed a few other of their insufficient housekeeping “findings.” You’d likely be inclined to never invite them back.

Try using the words “observations,” “conclusions,” or “conditions,” rather than “findings.” You may find they work better in your organization. Audit clients will feel less like they are being accused of hiding information or that they didn’t see something that the auditors later uncovered.

2. “Weakness”
When we observe an issue, we also sometimes couch that issue by using another troubling word, “weakness.” We may not be able to avoid calling breakdowns in internal controls, as they relate to SOX-like work, “control weaknesses” if the controls are not working as they should (or at all). But we should avoid calling observations outside of controls “weaknesses,” if possible.

Think about it. You go into the manager’s office during an audit, and you say, “excuse me, if you have a few minutes I’d like to go over a few weaknesses that have come to our attention during our review of your area.” Expect immediate defensiveness. We might as well be criticizing their first-born by pointing out weaknesses in how the child looks or plays with others. The word connotes physical ineptitude and can strike a visceral blow to any manager’s ego.

Like weaknesses, “deficiencies” isn’t any better for all the same reasons. So, perhaps, try “opportunities,” or “matters for attention,” rather than “weaknesses.” Even “challenges” or “difficulties” will garner a better response from audit clients.

3. “Material”
While the term “material” has been part of auditing language forever and, although tough to really quantify, is an important and meaningful word. I mean, if it’s not material why look at it or consider it at all? We also have the SOX-related nomenclature of “material weaknesses” (which people want to avoid as best as possible). Look, if you tell someone something is “material” and it truly is agreed that it is “material,” that’s a big deal.

Yet when we tell someone who is the owner of something that we want to talk with them about a matter that is “material,” what would be the natural reaction of the person on the receiving end of that word? Disbelief, denial, and outright defensiveness are natural human reactions when told something is “material,” in a bad way, which affects them or their responsibilities. Think about being in the doctor’s office because you have not been feeling well. After a bit of consultation and tests, the doctor comes in the room and tells you that there is something “material” to discuss. You are likely to act with disbelief, denial, and defensiveness, naturally. The word conveys an urgency we might not intend. Do we really want our clients to react that way, now or in the future?

Note that “material” has an important legal context. The Securities and Exchange Commission defines “materiality” as anything a reasonable investor would deem relevant to their decisions about whether and how to invest. While it’s important to use this word carefully in this legal context, it’s also easy to adopt the word and use it outside this context, which can result in misusing it. Another problem with “material” is that it implies that everything else isn’t important or that other aspects of an audit client’s work are meaningless, which is not a great sentiment to convey.

So, perhaps, when you don’t really have to use the word “material” (or “significant” for that matter) in consultation or in writing, maybe consider some different language. Hey, there’s something important I want to run by you when you have a moment, and maybe we can write about the top matters for attention without calling them “material” (unless, of course, we must).

4. “Disclosed” or “Uncovered”

Like the word “finding,” the word “disclosed” (or the word “uncovered’) has a similar connotation. It’s as if the issue was hiding and no one knew about it or would ever find it without you, and your brilliance—the internal audit superhero with x-ray vision. OK, sometimes things were truly hidden, unintentionally or, worse yet, purposefully, and we did use our internal audit superpowers to uncover it and then we get to puff our chest and—cue music here—disclose it. But, come on, that’s rare.

Yet, we use the terminology all the time. For example, resulting from of our testing, it was disclosed that blah, blah, blah. Or, based on our review of the area, it was uncovered that yada, yada, yada. Now, if you’ve got sneaky and underhanded clients, who are going around hiding stuff from you that you truly uncovered and want to disclose to the world, then fine. But most clients don’t do that, and you want to collaborate with them in the future.

Imagine how you’d feel if the external team you hired to do your Quality Assurance Review (QAR) started telling everyone, verbally and in writing, what their work (and only their work) disclosed and uncovered in your internal audit department? How would you react to that? “Disclosed” implies that something was formerly a secret and now you are airing the dirty laundry out for the world to see.

So, maybe we need to back off the “disclosed” and “uncovered” language, at least a bit. Options might include, “along with management, we identified …,” “taking full stock of the evidence, it can be concluded that …,” “testing demonstrated that …,” or similar language. Just don’t use “revealed” instead. That’s just as bad.

5. “Entrance” and “Exit”
OK, you may need to bear with me a bit on this one.

We’re going to start an audit project, and our first meeting with the client is called, in many companies, an “entrance meeting.” Then, when we’ve concluded all our fieldwork, what do we call the last meeting with the client to wrap things up and ride off into the sunset to work on the audit report for weeks on end? The “exit meeting.” They are decent terms, descriptive of exactly what they are … our entrance (ugh, the auditors are here) and our exit (yes, they are leaving, let’s party).

Let me ask you this, though. Is this audit, the one you are doing an entrance into and an exit from, the first and last time you will ever see these folks? I sure hope you have an ongoing relationship and are interacting all year long, or at least on occasion. If that’s the case, there is no entrance and there is no exit because, like the song Hotel California, you may never leave. And, if you’ve done your relationship management right, they are happy about that.

The point is that “entrance” and “exit” are old-school terms from when we did things on a cyclical basis and may or may not come back. Back then, relationship-building was less important and audits had a fixed beginning and end. So, maybe we need to stop calling them “entrance meetings” and “exit meetings,” and just call them something else that isn’t so clinical and auditor sounding. Schedule your Project Introduction Meeting at the beginning and, maybe, your Project Wrap-Up Session at the end, or something like that. And, if you are well down the path of an agile implementation, all that entrance and exit stuff becomes moot anyway.

6. “Consulting”
Back in 1999, the Institute of Internal Auditors introduced the well-accepted and globally codified definition of Internal Auditing as: “An independent, objective assurance and consulting [emphasis added] activity designed to add value…” Back then, the word “consulting” was viewed positively. And, for internal audit to be positioned to not only provide assurance, but to also be viewed as a consultant? Well, to borrow a ’90s term, that would be “da bomb!”

But, somewhere along the way, the word “consulting” came to be viewed less positively, and we’ve started to insert the word advising to soften the term. Should we blame consultants for tarnishing a good word, and making people view consultants and, in turn, consulting, negatively? Perhaps, but that’s not the point.

We all want to be advisors, and the gold standard, the place to be, the coolest accolade, would be to be trusted and be an advisor. So, in our pursuit of being that vaulted trusted advisor, let’s drop the word consulting from our vocabulary, once and for all. Look, your clients might want to “consult” with you, but hopefully you are “advising” them.

7. “Satisfactory”
Often, we as auditors don’t want to overcommit, and use words that might get us into trouble later if something is determined to be different than our work concluded. There is just so much we can evaluate and then we must draw a conclusion and move on. So, we settle on words like “satisfactory,” even if things are notably better than the word implies. From an internal audit perspective, we are hedging out bets. We don’t want to be overly flowery with praise, and just conclude something is either “satisfactory,” “needs improvement,” or “unsatisfactory.”

Put yourself on the other side of the table. Let’s say, for instance, you’ve worked hard at something, gone the extra mile, and made sure it was done exceptionally well. Then, someone comes in, looks it over, and decides that things seem “satisfactory.” Ouch, gut punch! You put in a ton of effort, expected to get an “A” grade, and the professor gives you a “C.” That’s kind of deflating.

Let’s not forget that the word “satisfactory” means acceptable or good enough, but not outstanding or great. Yes, there are reasons to fall on the crutch of concluding, placing our highest auditor grade on something, that it is “satisfactory.” But, perhaps, if we can avoid it, we take the risk, rely on our work, and conclude that something better than a measly “satisfactory.” Don’t be afraid to say if something is exceptional, great, works well, or exceeds the requirement.

The Last Word
There is a lengthy list of good reasons, justifications, and rationalizations for why we use the words we do as internal auditors. Many of them have stood the test of time. Many are in use, and still exist, because we are hearing the world through our own ears, and not our clients’.

If we stop for a minute, and consider what these words sound like and what they actually mean, and the impressions they may leave on the ears of our clients who hear them, perhaps they are not the best words to use. Perceptions are reality, and if you want to change perceptions, maybe one way to do that is to change our vocabulary. In other words, say what you mean and mean what you say.

5 Ways to Ace Your Audits in 2023

Posted by External Dev | January 13, 2023 | Audit Career Trends, Audit Salary, Auditor jobs, Big 4 Accounting firms, careers in audit, CIA Recruitment, Data analytics, ESG, Fraud Audit, internal audit objectives, internal audit process, IT Audit, Risk Audit

In 2023, organizations may face new and expanded cybersecurity and compliance mandates, which could vary from location to location and from one industry to the next. As a result, your organization may be looking to obtain a certification or will need to pass an audit for a specific set of standards or requirements.

While recognition for demonstration compliance or receiving certification is a great reason to celebrate, the process leading up to that is often time-consuming and sometimes dreaded, especially if you must undergo an audit first.

But audits don’t have to be as frustrating as they once were. With the right resources and tools, you can pass your next audit with ease. Here are five tips from Audit International to help:

Know your current program state.
Don’t wait until the audit is underway to find out where you might have gaps or weaknesses. Go ahead and assess your current compliance state so you know what you need to address before your real assessment gets underway. Consider using a cybersecurity compliance platform that automates these assessments for you and look for a platform that gives you real-time compliance scoring, so you’re never caught off-guard if something isn’t functioning as you intended or you’ve overlooked an important control or other security measures.

Document and evidence.
You can do everything correctly and score 100 on your current assessment, but if you don’t have a document repository that puts everything you need right at your fingertips in one place, or if you can’t supply all the necessary proof and evidence an auditor may want, you likely won’t get credit for what you’re doing right. Put away those binders of dusty old printouts you haven’t looked at since your last audit. Instead, use a cybersecurity management platform to track and retain all of your evidence and documentation all in one place for easy, shareable access with your auditors.

Put teamwork to work for you.
Instead of chasing down who’s responsible for which compliance requirement and trying to understand what they’re doing and how well they’re doing it, use a compliance management platform to help you automate task assignments, track progress, send alerts when those tasks are complete, and assign new tasks as they pop up. A platform like Apptega can even externally alert your auditor when your team has completed an evidence request or other necessary task.

Communicate across your organization.
One of the challenges in building a compliance culture is often that program managers speak industry lingo and not the same language that people in different roles within the organization can understand and relate to their day-to-day responsibilities. Instead of scrolling through hundreds, maybe even thousands of rows of data to find what you need for your next compliance conversation, consider using a compliance management platform that has a pre-built library of reports you can quickly draw on for your next engagement, whether that’s your C-suite, an auditor, or your tech team.

Don’t go at it alone.
While you can meet all the requirements on an audit prep checklist, the reality is when you work on a program, it’s easy to overlook issues an outside eye might catch. Before your next audit, go beyond a self-assessment and consider working with an outside compliance consultant to take a closer look at your existing program and help you seek out and address issues before your auditor finds them.

Internal Audit ‘Hot spots’ for 2023

Posted by External Dev | January 7, 2023 | Audit Career Trends, Audit Salary, Auditor jobs, careers in audit, CIA Recruitment, Data analytics, ESG, Fraud Audit, Internal Audit, internal audit objectives, internal audit process, Internal Controls, IT Audit, Risk Audit

Audit International are stating the main Risks and Actions companies are putting on their 2023 internal audit plans. The past year concentrated attention and shone a spotlight on the increasing fragility of organizations. With a complex set of risks manifesting simultaneously, audit committees are prioritizing some of the most serious implications resulting from the ongoing war in Europe and a triple squeeze of supply chain, workforce and inflation pressures.

According to data from Gartner’s 2023 Audit Plan Hot Spots report, which identifies the key risks and recommended actions for Audit to benchmark their efforts against in the coming year, 81 percent of Chief Audit Executives polled have cyberthreats on their agenda to cover in audit activities over the next 12-18 months, with an additional 13 percent tentatively planning to do so. Even in a year with a high number of varied and seemingly imminent risks facing organizations, cyberthreats remained an agenda topping item for Audit Committees and senior executives as the drivers of the risk shifted from a generalized focus on inadequate security controls to specific need to prepare for highly sophisticated state-sponsored cyberthreats and new cyber breach disclosure requirements. Even as some risks remain perennial threats, shifting drivers can change the nature of the risk and need for updated mitigation and coverage plans.

Cyberthreats, however, are not the only vulnerability an organization faces in an increasingly fragile world. In developing this year’s report, the need for Audit to support their organizations through rethinking their approach to resilience in the face of growing fragility became evident as a key theme underlying several top organizational risks. These risks are generally under-covered in audit plans for 2023, in some cases less tangible and immediate than the category of risks that have been urgently prioritized as a result of the headline events of this year.

Resilience-related risks are manifesting with real world and high-velocity consequences all the same, and Audit needs to understand the risk indicators, urgency drivers and the right questions to ask the business to ensure that rethinking resiliency is on the agenda in 2023.

Below I review three such risks and strategies for Audit on how to approach them.

Climate Degradation
Nearly six in ten CAEs have no specific plans to provide assurance over climate degradation next year. This in and of itself is a key risk indicator for most organizations, as a failure to refresh business continuity plans related to climate risks puts an organization at higher risk for a key infrastructure failure and related loss of productivity among other risks.

While CAEs generally express limited confidence in their climate coverage plans, rethinking resilience means going beyond sustainability reports and identifying vulnerable assets. Audit departments need to incorporate in their plans the inevitability of increasingly severe weather events and mitigation strategies for the loss of key infrastructure, both their own and that of key third parties, such as suppliers.

Culture
Even more challenging for Audit is culture, traditionally a key source of resilience for many organizations that now is fraying under the weight of new working models (hybrid/remote), social and political polarization and a general lack of connection felt by employees who are reporting witnessed misconduct at rates 30 percent lower than pre-pandemic.

Despite such challenges, only 16 percent of CAEs are revisiting culture in light of shifting sociopolitical expectations of their workforce, investors and the media for next year, and just 10 percent report they are highly confident in providing assurance in this area. Internal Audit needs to push the business on reassessing how employee expectations and engagement are monitored in a hybrid and remote world, while policies related to political and social issues need to be formulated now and not in real time during a crisis.

Organizational Resilience
Ultimately, rethinking resilience means covering organizational resilience as a dedicated risk that is part of the audit coverage plan. Organizational resilience, broadly defined, is an organization’s ability to withstand shocks. This is likely to become ever more important in the face of new and ongoing geopolitical tensions, which can abruptly trigger a set of interconnected but differentiated risks to manifest simultaneously. While refreshing scenario planning and mitigating against change fatigue are necessary steps in this process, building true organizational resilience requires a view into the interconnected risks facing an organization and developing resilience-related initiatives across the enterprise.

With less than half of CAEs definitely planning to cover organizational resilience next year and just 32 percent highly confident in providing assurance specifically on matters of resilience, it’s clear there is more work to do in establishing this as a top audit priority. Chief Audit Executives can regain momentum by launching activities that encourage collaborative discussions between business units on interrelated risks and reviewing plans to address change fatigue within their organizations at a time when events over the past two years have likely dramatically diminished capacity in this area.

While these resilience-related risks feel less tangible and urgent than mitigating against “clear and imminent” dangers like supply chain vulnerabilities and state-sponsored cyberthreats, they are important and increasingly acute risks in their own right. Viewing them through the lens of rethinking what it means to be a truly resilient organization can be a useful framework for starting the right conversations within the Audit Committee and formulating effective coverage in next year’s audit plans.

Group Urges Internal Auditors to Embrace Data Analytics

Posted by External Dev | December 9, 2022 | Audit Career Trends, Auditor jobs, Big 4 Accounting firms, careers in audit, CIA Recruitment, Data analytics, ESG, Fraud Audit, Internal Audit, internal audit objectives, internal audit process, internal audit recruitment, Internal Controls, IT Audit, Risk Audit, SAP

With businesses facing the strongest economic headwinds in years, the Chartered Institute of Internal Auditors is urging internal auditors to embrace data analytics to navigate more risky, uncertain, and volatile times ahead.

To support their call to action the Chartered IIA, a professional organization for internal auditors in the U.K. and Ireland, in partnership with AuditBoard has published a new report “Embracing data analytics: Ensuring internal audit’s relevance in a data-led world.” The report is aimed at encouraging internal auditors to fully embrace data analytics in the age of systemic risk.

The aftermath of the pandemic, the war in Ukraine and now a recession has all magnified and exacerbated a multitude of business-critical risks. These major risk events are having compounding downstream effects on supply chains, inflation, growth, costs, Forex rates, cybersecurity, and workplace mental health. Creating an adverse business risk environment of a kind not seen for decades. Making it challenging for boards to keep pace with the myriad of risks they now face.

“Data is key for organizations to navigate more risky times ahead and it is key for the future of internal audit. Understanding what the data shows about risk resilience in today’s complex environment will help ensure organizations’ success. We urge businesses and internal audit to embrace data analytics,” says John Wood, Chief Executive of the Chartered Institute of Internal Auditors.

However, in these challenging times harnessing and embracing the power of data analytics can enable internal audit to deliver faster and more incisive insights on fast moving risks, that boards can then act upon swiftly. Helping organizations to quickly identify, manage, and mitigate emerging risks during rapidly evolving situations.

Needs Improvement
The report is based on a survey of 298 internal audit executives from the private, public, and third sectors across the UK and Ireland. The survey revealed:

60% of internal audit functions are already using some for of data analytics, an additional 7% having advanced to AI. However, this still leaves a third yet to adopt data analytics.
The top three risk areas for using data analytics are financial (62%), fraud (17%), and legal and compliance (6%).
The top three benefits of using data analytics include greater level of assurance (48%), 100% audit coverage (21%) and enhanced efficiency (14%).
The top three barriers to fully embracing data analytics include lack of skills (49%), lack of resources (24%) and lack of time to implement (12%).
Only 17% expressed concern that internal auditors could be replaced by robots in the future. Instead, data analytics and AI can free up internal auditors’ time to focus on strategic and systemic risks that could be coming down the track.

The report makes several recommendations for boards and internal audit, including:

– Boards and internal audit should ensure that senior management has defined the organization’s top five risks, and that the data support this view and is correct and reliable.
– Boards and internal audit should ensure that the organization has its own data strategy in place.
– Boards should work with internal audit to identify what data is available to improve risk assurance, and how data analytics could be applied to this data to improve assurance coverage across the organization.

– Boards and internal audit should work together to champion a data analytics culture and promote a data-first mindset.
“Given the warp speed at which risks can emerge and wreak havoc, embracing data-analytics is non-negotiable for boards and internal audit if they are to stay on top of the multitude of risks that organizations are now wrestling,” says Richard Chambers, Senior Internal Audit Advisor of AuditBoard, and former President of the Global IIA. “Data analytics enables faster and higher quality assurance for boards to then act on. In stormy economic times a data-led approach has never been more urgent.”

Audit International believe effective communication of information on risks associated with hazards and control measures, is an essential and integral component within the risk assessment process. The fundamental goal to communicate the outcome of your risk assessment thereafter to the rest of the organization, contributes to the health and safety of your (peer) employees.

A risk assessment is usually executed by you as a safety professional, being part of the safety department of an organization. For you, the outcome of the risk assessment is often quite clear and simple to follow. However, struggles do arise to communicate about risk outside the safety department. How do you communicate to different organizational levels effectively? How do you make sure everyone in your organization is not only aware of, and but also understands the risks they are dealing with? Audit International have these tips.

In this short blog, we will focus on the Communication and Consultation step. You must communicate about your risks and its treatment, but how do you handle this? If you communicate too much no one will know what to listen to nor remember it. If you communicate too little, no one will understand the context or details of the information. Use the tips below to overcome such struggles.

Tips for effective risk communication:
1. Have a common ground
Before talking about risks, people need to understand the basic concepts of safety. Do not assume that everyone is on the same page regarding risks. Define concepts clearly to avoid confusion. Make sure that there is a common definition of risk established, so employees manage risk based on the common concept and view of what constitutes as risks. Inform your organization about the nature of the risk management and why you are doing it.

2. Make sure everyone can understand
As you communicate to different levels and departments in de organization, it is convenient to tailor your message to the one who receives the message. One of the goals for risk communication is to provide meaningful, relevant, and accurate information in clear and understandable terms. Be aware that these criteria can be different for people on the operational work floor than for higher management. Adjust your information to your target audience, so everyone in the organization knows their role in managing the risks they face. This will help you filter the information effectively.

3. Consider the form of communication
How often do you want to communicate to your colleagues? Depending on which colleagues, this could be every day, every week, monthly, or yearly. If the frequency is yearly, writing a report will not be too much trouble. If the frequency is weekly, writing a report will likely be too time-consuming to create and read. It won’t be long before your employees are demotivated which will likely lead to less clear communication – or worse, confusing communication! Think about other ways of communication, such as videos, posters, or interactive means. A one-sided communication strategy is likely to be less effective.

4. Build a sense of inclusiveness and ownership
You know that managing risk is not a one-person job. This process involves different departments and colleagues. It is impossible to manage risk effectively if there is no communication and consolation with each colleague that is involved – with each stakeholder. To optimize the communication and consultation you need to make sure that each stakeholder understands, knows and agrees what is expected from them in relation to the management of risk.

By communicating on risk management, you will involve your colleagues and create inclusiveness and ownership. Ownership is important, because let’s face it: risks that are not owned are often not managed. Clarity on personal responsibilities is very important to prevent incidents from happening. There is no need to have accidents that could have been prevented through effective communication between stakeholders.

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