Sunday, July 24, 2016

Internal Audit is not Rocket Science,but it Still Needs to be Managed by Qualified Professionals!

A member of my LinkedIn group (Internal Audit & Risk Management Consultants) has posted a serious of discussions asking for help in understanding several  audit concepts and  techniques for the purpose of starting what sounds to be a new internal audit activity.The member does not seem to have previous internal audit experience (at least this is my impression from the questions raised).I am happy that many members have offered advice and guidance based on their experience and that the group, once again, has been utilized to add value to its members.But at the same time,I am troubled with the idea of tasking someone with no internal audit experience or qualification to start building an internal audit activity!Unfortunately,I come across similar situations too often! I am in no way trying to undermine the experience or qualification of this member, to the contrary I appreciate it when one asks for help when he/she needs it! I am simply trying to shed  light on this important issue!

Would you ask a civil engineer  to perform an open heart surgery? Of course not, regardless of how  good  this engineer is at what he/she does (engineering)! Why do companies ask people with no internal audit backgrounds to start an internal audit activity? It could be one or more of the following reasons:
  • Lack of understanding of what internal audit is about and what qualifications are needed to do the job.
  • Lack of appreciation of the importance of internal audit on the basis that it is not a rocket science, anybody can do it!
  • The desire to save money by not hiring qualified auditors and trying to utilize existing resources regardless of their experiences.
  • The person tasked with starting the internal audit activity is very much trusted by management and their is a  belief that he/she can handle the assignment regardless of experience!
  • Sometimes someone with no prior internal audit experience will volunteer to set up shop and convinces  management that he/she can handle it!
I do not believe it is fair to any person to be put in such a situation regardless of the circumstances. The consequences to the company and other stakeholders as a result of this practice may be serious! It could simply be that the internal audit activity is doomed to fail before it set sail!

My advice to any person in similar situation is to have an honest and open discussion with management and explain what he/she can or can not do.Asking colleagues/contacts for help is fine,but sometimes outside professional help through hiring or other venues will be needed and should be done with management's  knowledge and approval!

Let's remember what standard 1210 stipulates:

"Proficiency: Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities. The internal audit activity collectively must possess or obtain the knowledge, skills, and other competencies needed to perform its responsibilities."

Can you imagine the consequences of  this situation especially when the entire internal audit activity consists of that single person with no internal audit experience!

These are my thoughts, please share yours!

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