Saturday, November 1, 2014

Internal Audit: It is Time for Self - Judgment Day!

As we approach the year-end, it would be a good time for the internal audit activity to take a moment to look hard at its achievements and shortcomings of the year. While the achievements are a pleasant topic to cover, the shortcomings are not!

In order to have a meaningful self-assessment/ self-judgment, the CAE should exercise:
courage,
professionalism,
 -honesty
 - and most importantly he/she should put his/her ego aside!

The self-assessment/self-judgment should be a continuous process and taken seriously by the CAE. Just remember that if you don't do it yourself, someone else will do it for you! It obviously should be an integral part of the activity's quality assurance and improvement program (QAIP).

 In my opinion,  it starts with determining the internal audit objectives for the year and the mechanism/ approach to achieve them. Let's not forget that we also need to assess the risks that might endanger reaching these objectives!

It may sound an old-fashioned approach, but preparing some sort of  a "register " to  captures the shortcomings as they are identified or detected may help in reviewing:

- what went wrong
- why it happened
- how can we fix it

During the " self-judgment day" the CAE should address, among other things, the following topics:

- Management and audit committee satisfaction with internal audit performance
- His/her satisfaction with the performance of the activity as well as audit team satisfaction!
- should honestly answer the question: did we really add value and made a difference?
- what new skills did the internal audit "as an aggregate" add to its skills pool?
- Is the internal audit up-to-date when it comes to risk, IT, business, regulatory issues?
The list of topics can go on and on depending on the complexity of the operations and the experience of the CAE! The purpose of this blog is not to list all these topics in details, but rather to serve as a reminder of the importance of taking an honest moment to evaluate our performance.

Happy self-judgment day!

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