This is part one of a two-part series on internal audit strategy. Part two will be published on Thursday, May 10, so stay tuned!


As an internal auditor, you dance a delicate pas de trois between traditional assurance and fresh strategy. The variation of this dance takes a tried-and-true audit activity and elevates it to enhance the organization’s strategic position.

For some companies, strategic findings are unchartered waters.

This year’s Internal Audit Priorities Report writes that the internal audit team must tailor its plans to fit the company’s strategic business objectives.

Part of being strategically intelligent is being emotionally intelligent as well. You have to find a receptive auditee, know the right information, and engage in the proper conversation.

Infusing an audit with strategic intelligence can be a little uncomfortable. But a little stretch does an auditor (and the company) good. Below are a few tips to articulate the big picture to your team and your auditee.

Rule #1: Get Some Backup in Place

One audit director, Jeff B. (name withheld due to the exaples he shared) with 20 years experience used to work for the state before entering the private sector. In government, they did a lot of performance audits, where they audited whether resources for programs were used efficiently and effectively. However, upon entering the private sector, Jeff seldom conducted performance audits.

“The problem with doing performance audits in the private sector is one, benchmarking data is more difficult to find, and two, the conventional auditor doesn’t have the conversation with business people that we should do it.”

Jeff makes the point that, even in the private sector, we can conduct efficiency audits. Efficiency audits have a broad definition. But for this article, an efficiency audit looks at activities, processes, and expenditures, and looks at strategy – in other words, how can we do it better?

But you don’t want to go into an audit guns blazing telling everyone how to run their team better. Nope, that would probably be emotionally unintelligent.

Cue the dance. As my audit director friend found (who happens to have emotional intelligence running out his ears), if you tell the auditee where they can improve, they won’t like it. Unless you make it their idea first, and you give them what they want.

Rule #2: Choose a Receptive Group

Give your audience what they want; in other words, once you have your own team ready to look at efficiencies, then talk to your auditee, because an efficiency audit depends on how receptive your auditee is to audit. Let’s take for example the following groups A, B, and C. Which would be the most receptive to looking strategic ways to enhance their business?

Business Group A loves internal audit. They see you as consultants who can help add value to their business. You’ve probably already done some relationship building with this group.

Business Group B is not at all accommodating. The way they see it, if they aren’t making your job difficult, then they aren’t doing a good job. (Business Group C falls somewhere in between, so we won’t talk about them).

Although Group B could probably use a trick or two from an efficiency audit, they will probably not be receptive to it. However, Group A is a receptive group.

So Group A is the crew you would want to approach for strategic findings.

Download our new 2018 Internal Audit Priorities Report to learn what the top internal audit priorities are this year.

Rule #3: Give a Lot, Take a Little

When the water is right (i.e., you have a good area that could use some strategic intervention and you have a receptive auditee), still approach with caution.

Jeff says he like to approach the auditee in a way that makes it mutually beneficial. “You say something like, ‘we’d like to try something a little new. Here are the 5 things I’m going to do for you. In return, I want you to give me the freedom to try these 2 things.’”

The above conversation is delicate. Either the auditee could see you as working outside of your mandate, or they understand what you’re trying to do for the company and are supportive. You won’t know until you ask.

“We’ll pick and choose our strategic audit spots – when the auditee is receptive and when we have a good idea.”

A critical piece of the puzzle is once you find an area to improve, how do you approach the area of improvement with the auditee?

“That’s when it’s important to have those sit-down conversations,” says Jeff. “Again, we try to have that conversation up front. Don’t blindside them with Hey I have a great idea, because some people still see auditors as if they say it, I have to do it.”

On the other hand, if you’re just providing data and not making the decision, it doesn’t mean you can’t show them the idea. All it takes is one supporter, and that supporter will help you navigate.

Conclusion

One of the reasons I hear most often that people stay in audit is because it’s different every day. This profession attracts people who want to see things differently. That’s why taking the same data and asking a different question is right up your alley. So get uncomfortable –it’s a strategy thing.

Next week we’ll look at three common areas where one auditor asked different questions that yielded strong strategic outcomes.

Are there areas where you’ve found that audit could help strategically? What were your successful communication tactics (and your not-so-successful tactics)?

Want to learn even more about this topic and others? Mark your calendars for our upcoming IT Audit & Controls Conference and the highly-anticipated SuperStrategies Conference & Expo.

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