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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Has your Internal Audit function tested positive for the irrelevance virus?

 By now, most of you have realized that the world as we knew it has changed forever! The change has affected almost everything in our lives at the personal and professional levels. Some of the changes could be opportunities in disguise, while others could bring devastating consequences to some businesses and certain functions within an organization.

Has your Internal Audit function tested positive for irrelevance?

While many Internal Audit functions have shined and demonstrated that they are indispensable during the crises, others were not so lucky! If your Internal Audit has failed to provide help, add real value, and start the evolution process during the pandemic, it could be because it has been infected with the "irrelevance" virus! In this case, your Internal Audit is dying or most probably has been dead for a while!

On a more serious note, can the COVID 19 pandemic weaken internal audit in some organizations? The answer depends on many factors such as:

• The performance of Internal Audit: if you have not proved your value to the organization during this crisis, it is unlikely that your Internal Audit function will emerge from it unscathed.
• The performance of the organization: financial difficulties may lead to cuts in the Internal Audit budget, lay off of auditors, and/or other measures.
• Some fear that management may attempt to use the crisis as an excuse to weaken Internal Audit to serve its agenda or in retaliation for previous actions by Internal Audit! I would like to believe that this scenario will not happen.

Get Vaccinated!

Yes. there is a vaccine against irrelevance and if you have not taken it yet, do that now. It is not too late. Here are some basic vaccine dose recommendations:

• Leave your comfort zone immediately and be agile. At AdapGility Consulting we developed the motto " Be agile, be alive" because these days if your IA function is not agile it means it is paralyzed or dead!
• Work on your mindset (that could be the hardest part). Become flexible and adaptable, it is essential to enable you to transform into agile internal auditing.
• Understand the true meaning and intention of the internal audit independence concept. Don't hide behind it!
• Do not wait for a seat at the table to be offered to you. Invite yourself to the party.
• Keep your eyes, ears, and more importantly your mouth fully open! Real-time communication of what matters is the key to relevance.
• Maintain an up-to-date understanding of the company's objectives and business. This is a cornerstone for auditing what matters and adding value. Keep the conversation going with your stakeholders in these uncertain and unprecedented times.
•  Understand what is the stakeholders' perspective of what adding value by IA means to them.
• Take a tablespoon of the "courage syrup" three times a day!
• Put serious efforts into developing your soft and technical skills. Invest in yourself.
• Utilize available technology to its fullest potential.

The above is not rocket science and has been repeated time and time again by the IIA, the consulting firms, thought leaders, and others. Almost all internal auditors are familiar with it. However, there is still a gap between what internal auditors know and what they can successfully implement. Bridge the gap!

Can the world live without Internal Audit?

 How would the world look like If Internal Audit fails and is marginalized or eliminated?

In researching materials for this topic I came across an undated article questioning  "What if Internal Audit disappeared?". The conclusion was basically that it will not be the end of the world, and that    "key stakeholders would still demand some degree of checks and balances and that the other functions—second-line compliance and risk management, external audit, regulators—would naturally fill much of the void". The interesting thing is that the author's conclusion was based on discussions with his friends in Internal Audit who he described as pragmatic!

What do you think will happen if Internal Audit ceases to exist?

These are my thoughts, please share yours!

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