Tuesday, June 15, 2021

Internal Audit's Role in Returning to Workplaces

 Last year, Richard Chambers in a blog post entitled "Returning to Workplaces Will Be Risky: Roll Up Your Sleeves, Internal Audit", offered examples of the questions Internal Audit should ask and get answers to from management regarding their plans to a safe return to the workplaces. These questions included:

  • Has management adequately identified and assessed return-to-workplace related risks?
  • Do proposed return-to-workplace policies and controls address the key risks?
  • Are policies/controls effectively implemented (including communications)?
  • Is the overall program functioning as intended, or are improvements warranted?

Obviously, the return to the workplace was not significant last year or during the first half of 2021. However, this may change significantly during the second half of the current year due to progress made in vaccination and the reopening plans around the world. I believe Internal Audit should focus its attention on the following issues:

  • Reinforce & strengthen relationships: working remotely for an extended period of time under a climate of uncertainty and disruption may have affected  Internal Audit's relationships with its stakeholders. The CAE's priority, in my view, should be to reestablish timely contacts including in-person meetings with stakeholders as much as the safety and pandemic protocols permit. The stakeholders want to talk to Internal Audit as well as hearing from CAEs on their views, insight, and plans. A smart CAE will find the time to connect with his /her stakeholders and make the most out of the connection.
  • Work closely with HR & Legal Departments to ensure there are proper anti-discrimination and conflict resolution plans: it will not be surprising, in the short term at least, that there will be employees resisting and challenging the organization's safety protocols such as wearing masks and physical distancing. There will be also others who did not get vaccinated for whatever reason. This may lead to conflict between the employees themselves and with management.  Internal Audit needs to ensure that there are practical and fair plans to deal with such situations.
  • Encourage management to communicate the return policies and procedures before the return to the workplace: employees should not be surprised by the organization's procedures and protocols when they show up to work. They need to be aware in advance of what is waiting for them in the office and plan accordingly.
  • Monitor and assess changes in corporate culture: whether we realize it or not,the pandemic and working remotely have changed people. The change could be in the mindset, the mental welness, priorities, perspective of life, and career plans. These changes can potentially influence the corporate culture. Internal Audit needs to work closely with HR and others to monitor trends and changes in culture to enable management to take timely actions to address the change.
I would love to hear from CAEs who have already returned to the workplace. Please share your experience and what challenges have you faced. What advice would you give to those who are about to return to their offices?

These are my thoughts, please share yours!






Picture credit:www.telljp.com



Monday, March 15, 2021

When Internal Audit Is Agile And The Audit Committee Is Not!

The traditional challenge for Internal Audit was in its ability to meet and/or exceed its stakeholders' growing expectations. While some Internal Audit functions may have suffered and failed to achieve this objective,  I would like to believe that most of the functions have been successful not only in meeting the expectations but also in taking the lead and initiative to introduce change and innovation and prove their relevance!

One of the buzzwords and trends nowadays is "agile internal auditing". Internal Audit functions around the world are working on understanding what it is about, exploring what it means to their operations and how to successfully implement it in their organizations. A successful implementation requires the buy-in and collaboration of stakeholders. You would think that management and the audit committees would be thrilled when Internal Audit starts the transformation process. That would be true in most cases, but sometimes there are forces within the Organization that resist change. When these forces are management, Internal Audit can seek the support of the audit committee to convince management. But, what if the audit committee is the resisting force? Imagine a situation where a CAE approaches the audit committee with  his/her plans to implement agile internal auditing and the answer he/she gets is:

  • "This is a luxury we can't afford",
  • "Stick with the audit plan, it works", 
  • "This is not the time for a dramatic change", 
  • "We don't have the resources and/or experience to do this", 
  • " We will think about it",
  • "What is agile internal auditing?"
Does this sound familiar? If you have heard any of the above responses, you are not alone! 

What comes to your mind when you hear such a response? You may conclude that Internal Audit did not do a good job communicating the concept and benefits of agile internal auditing to the audit committee. Perhaps they did not explain that it is more of a  mindset than a methodology, that it can be applied gradually, that it is not all or nothing approach or a one approach fits all solution. The reaction of the audit committee could indicate that there is a deeper disconnect with the audit committee! You may also conclude that the audit committee members don't possess the right mindset, vision, experience, or qualification to discharge their duties in these uncertain times! 

What will be your strategy to bridge the gap with the audit committee and initiate the transformation to agile internal auditing.? Please share your experience and thoughts. And remember to:

                                                               "be agile, be alive"!

Adapgility Consulting is your Internal Audit Partner and can help with the agility transformation process.










Picture source:www.hme-business.com




Thursday, March 4, 2021

What Does It Mean to Be Ready And Relevant?

There is a common consensus that Internal Auditors need to be ready and relevant to succeed and thrive in the current disruptive times and to be ready for what comes next in the highly unpredictable future. Last August, I wrote a post entitled " Has Your Internal Audit Function Tested Positive For The Irrelevance Virus" in which I offered internal auditors some basic suggestions on how to get vaccinated against the irrelevance virus including:
  • working on their mindset
  • keeping an up-to-date understanding of the company's objectives and business
  • understanding the stakeholders perspective on value internal audit can add
  • transforming to agile auditing
  • understanding the true essence of the internal audit independence concept
  • communicating what matters in real-time
  • utilization of available technology to its fullest potential
  • taking a tablespoon of the "courage syrup" three times a day! 
You can read the full post by clicking on the link above.

Recently, I have attended a webinar sponsored by Workivia. The webinar took the form of a live discussion with Tim Berichon the author of the book " Ready and Relevant - Prepare to Audit What Matters Most ". While I have not read the book yet, I thought the discussion with Tim offered a good summary of his thoughts. The key takeaways from the webinar, at least as I understood it, are as follows:

  • Stakeholders want to see internal audit become relevant and they now see how internal audit can perform
  • Internal audit leaders have stepped up and taken their independence hat off and not allowed that to be a barrier or stopping them from being most relevant
  • Relevance is about survival at the internal audit level and the business level
  • The top barrier to agility and innovation was the internal audit team's resistance to change. Internal auditors need to look in the mirror and ensure they have the right mindset and the commitment to that mindset
  • Get in the middle of the ERM fan! Internal audit leaders can own the risk management programs
  • Automate everything you can. Free up internal auditors, they can not add value unless they can use their brains
  • Automation can not replace soft skills yet
  • Artificial Intelligence as it starts to be  more affordable may creep into the internal auditors' world in the future
  • Tell your stockholders something they do not know, If you tell them what they know, you are irrelevant.
  • Internal audit will never be irrelevant if it helps management meet its objectives
  • Drop the word added from the phrase"value-added".Everything internal audit does should be a value, it does not need to be added to anything
  • Set aside a certain percentage of internal audit time for management request and flexibility
I encourage you to watch the entire webinar, it is available on-demand and can be accessed by clicking on the title of the webinar as shown above.

After reading the above, do you think you know what being "ready and relevant" really means? How do you define it and communicate it to your stakeholders? What do you do to achieve the "ready and relevant goal? Let's start a dialogue and share experiences. 



picture credit:www.ieltsg.com


Tuesday, January 5, 2021

Did working from home alter corporate culture?

With so many people working from home/ remotely during the pandemic for an extended time, it is logical that we question if this environment has influenced the corporate culture. In this post, I will try to shed light on how home culture may have interfered with corporate culture.


What is corporate culture?


There are many definitions of corporate culture, but it is basically the combination of beliefs, values, ethics, behaviors, and actions of management and employees in running the business. Because this post is mainly written for internal auditors, it is useful to remind them of  the definition used by the IIA in its practice guide” Auditing Culture”:


Culture represents the invisible belief systems, values, norms, and preferences of the individuals that form an organization. Conduct represents the tangible manifestation of culture through the actions, behaviors, and decisions of these individuals”.


Components of the corporate culture


Let’s first agree that every organization regardless of its size or structure has a culture. A quote from Pyxis blog post  explains this in simple words:


Large or small, start-up or mature, commercial or government, every organization has a culture. Corporate culture is either designed from the beginning or left to develop by default. Either way, you will have a corporate culture.”


To understand how corporate culture may be influenced, we need to identify its components. The most important component is people, without people there is no culture! A second component is vision/mission/values,  a third important component is the environment and place of work. Scholars add more components such as leadership, communication, teamwork, and others.


Did working from home alter corporate culture?


In trying to answer this question, we at AdapGility Consulting have posted a poll in our LinkedIn Group. The poll question was:


How did working remotely affect the culture at your organization?”


We have provided three possible answers and received the following results:

- It is about the same     29%

- Improved                       36%

- Deteriorated                  35%


While this poll is far from scientific, it provided me with a starting point to further explore the effect of remote working on corporate culture. The results somehow surprised me! While I was predicting that the vast majority of the answers will be in the stayed the same/deteriorated categories, I was not expecting that 36% of respondents felt that the corporate culture at their organizations has improved.

A study by Quartz and Qualtrics shows that 37% of workers feel that company culture has improved since the begging of the COVID -19 pandemic. The results of the study are almost identical to our Linkedin poll results! I am not sure if this reflects the reality or it is just a coincidence!


 Effects of remote working on culture


Looking back at the basic components of corporate culture, we may assume that the COVID-19 pandemic has changed, to an extent, how people feel and think.  It may have also changed our perspective on life, relationships, and values. The change could be positive or negative and it could be temporary or permanents! The change in the work environment/ place of work may also have an effect on mindsets and relationships.


The negative effects of working remotely are widely known such as the feeling of isolation, lack of focus, stress, and zoom fatigue, so I will not repeat them in this post. I will focus on discussing why almost one-third of the respondents to the survey and poll question felt that the corporate culture in their organizations has improved.

Supporters of remote working will tell you that working from home/remotely has provided them with a better work/life balance, reduction in costs (transportation, wardrobe), flexibility in time and place of work, ease of communication, less stress, and tax benefits in some countries.


We have asked the respondents to our poll question who said that the culture at their organizations has improved to share their experience and thoughts. We have received a detailed response from Theocharis Tzionis, a group member, who shared the below thoughts. While I understand the logic behind each point he raised, which seems to be influenced by the combination of the pandemic mindset/empathy and the remote working environment, the first point makes me wonder if the culture is being divided into sub-cultures that are acting in silos and not integrated throughout the organization:

-  First point to make here is that organisational culture for people could mean the culture in their teams, as this is the immediate effects on their own work life. For example, if your department has a more flexible approach to working hours than the rest of the organisation then you may perceive that aspect of culture to be a good one irrespective of the organisation as a whole.

- Managers became more compassionate and understanding.

- Less demanding which in trun makes people happier and thus more productive.

- You get to "see" leadership team more often. Through videos for the organisation's news and approach, as well as the actions for the pandemic.

- Provided far more information and subscriptions to apps for mental health (this should have been in place in my opinion irrespective of the pandemic).

- Managers and leadership team are more flexible.

- People get to spend more time with people that actually matters to them i.e. family and friends and don't have to spend time with office chat with people that may or may not like in the office. This will increase the overall perspective of organisational structure.

- Bad news are conveyed in a more professional and compassionate way because of the situation and the remote working.

- Businesses are changing, therefore leadership teams are forced to change and therefore are more acceptable to new way of doing things.”


- Managers became more compassionate and understanding.

- Less demanding which in trun makes people happier and thus more productive.

- You get to "see" leadership team more often. Through videos for the organisation's news and approach, as well as the actions for the pandemic.

- Provided far more information and subscriptions to apps for mental health (this should have been in place in my opinion irrespective of the pandemic).

- Managers and leadership team are more flexible.

- People get to spend more time with people that actually matters to them i.e. family and friends and don't have to spend time with office chat with people that may or may not like in the office. This will increase the overall perspective of organisational structure.

- Bad news are conveyed in a more professional and compassionate way because of the situation and the remote working.

- Businesses are changing, therefore leadership teams are forced to change and therefore are more acceptable to new way of doing things.”

What do you think? Does the above reflect what is happening at your organization?


Please share your thoughts.

Friday, December 11, 2020

It is time for an honest self-assessment!

As this unprecedented year is winding down, it is time for internal audit to take a moment and perform an honest self-assessment that goes beyond the requirements of standard 1311 of the International Standards of the Professional Practice of Internal Auditing.

If you have not already performed the assessment, here is a list of some suggested questions internal auditors need to ask themselves:

  • Did we really try our best to help our company to survive and succeed in any way we could?
  • Did we act fast enough or did we panic and hesitated?
  • Did we adapt to the new normal in a reasonable time?
  • Were we prepared for a crisis like this in terms of training, communication skills, and mindset? 
  • Did we lead or did we wait to be told what to do?
  • Did we realize that the pandemic also presented a unique opportunity for internal audit to rise and shine? Did we take advantage of this opportunity?
  • What did we learn about ourselves at the professional and personal levels? Is an internal audit career still in our future?
  • Did we accurately identify our weaknesses and shortcomings and developed a plan to deal with them?
  • Are we now more relevant or less relevant to the company? Did our stakeholders change their perception about internal audit? 
  • Do we have a clear vision of our role and responsibilities post-pandemic? Do we understand how we can contribute to business resilience and the continuation of operations?
  • If we have failed, do we have the courage to admit it and seek help to transform and pave the way back to success?
Some of the above questions are difficult to digest and answer. But, unless we do so, we can not move forward and achieve our goals. 

It takes honesty, courage, and determination to address the above questions and take appropriate actions.

These are my thoughts, please share yours!



Picture source:https://efisoul63.wordpress.com

Tuesday, September 8, 2020

If you can’t be an internal auditor anymore, what other career options would you consider?

 The recent survey results published by The Insitute of Internal Auditors (COVID-19: THE INITIAL IMPACT ON INTERNAL AUDIT WORLDWIDE) suggests that about 20% of internal auditors have lost their jobs permanently and temporarily worldwide. While the staffing decrease in internal audit was described as more likely to be temporary (14%) than permanent (5%), it is a sad fact that some internal auditors may not be able to find a job in internal audit in the near future.

If you face this situation, what would you do:

  • Never give up: keep networking until you land an internal audit position. In the meantime, you continue to keep yourself up to date with the profession and develop new skills.
  • Consider a career change. You may consider accounting, finance, management, or other operational positions for which you feel you have sufficient minimum experience to enable you to start working without hurdles.
  • Start over from scratch: go back to school and obtain a degree in another field of study.
  • Become a freelance consultant
  • Call it a quit and retire (depending on your age and financial health)!
  • None of the above. You will come up with another innovative option!

Assuming you decide that career change is in your future, what would be your preference?

Please share your thoughts.



A Getty Picture 

Tuesday, August 25, 2020

What does innovation mean to Internal Audit?

 

The pressure is mounting on Internal Audit to become innovative and this is understandable and expected. The call for innovation is not new but has certainly intensified during the COVID 19 pandemic as organizations are going through changes and transformation to adapt to the new normals. Innovation may mean different things to different people, in this post I will discuss what innovation means to internal audit.

What is innovation?

In traditional dictionaries, innovation is defined as developing a new idea, method, service, or product. In reality, it is more than that. It also refers to updating current processes to improve the quality of services and products. It does not mean that you always start from scratch!

What is innovation in internal audit?

There may not be a unified definition of what innovation in internal audit means. For some it could mean reinventing internal audit, for others, it means one or more of the following:
  • transformation to agile internal auditing
  • better leveraging of technology and greater use of data analytics, RPA, and AI
  • exploring and accepting new ideas and alternative processes to improve audits
  • empowering the creativity of internal auditors and encouraging brainstorming
  • better utilization of available resources
  • understanding how the organization is changing its business model and operations and adjusting audit plans and procedures accordingly
  • more access to specialized skills internally and externally
  • enhanced reporting and real-time communication
  • more investment in relevant training
  • risk anticipation and enhanced risk assessment
  • change of internal audit mindset and culture
  • striking the right balance between consulting and assurance services
What else do you consider as an innovation in internal audit?
Please share what innovation means to you. I would love to update the above-mentioned list with your definition and understanding of innovation in internal audit.

How to become innovative?

The first step is to clearly define innovation and ensure that your stakeholders agree with it. Then develop your objectives and start working on your mindset and the mindset of your team. Don't be afraid to think loudly even if what you are thinking about sounds crazy and illusional! Put some of these crazy ideas to test and see what happens!  I like the advice offered by a  themuse article on how successful people become more innovative. It lists the following characteristics.
  • they don't discount their crazy ideas
  • they get comfortable with fear
  • they learn about anything and everything
  • they never think they know it all
  • they surround themselves with heroes

Please share what innovation means to you and what have you done in practice to become innovative.

These are my thoughts, please share yours.





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Internal Audit's Role in Returning to Workplaces

 Last year, Richard Chambers in a blog post entitled " Returning to Workplaces Will Be Risky: Roll Up Your Sleeves, Internal Audit &quo...