Internal Auditors Have Received Two Failing Marks!

The results of two recent surveys conducted by PwC (2017 State of the Internal Audit Profession Study) and Protiviti( 2017 Internal Audit Capabilities and Needs Survey) were disappointing, to say the least. I know some of you may find the title of this article a little offensive, but keep in mind that we can’t overcome our weaknesses and move forward if we don’t address them honestly and go through a thorough performance self-assessment!

Let’s start with the PwC report. It starts with a depressing statement :

“Despite strong ambition from CAEs to grow their value to the organization, PwC’s 2017 State of the Internal Audit Profession study shows Internal Audit is losing ground in trying to keep pace with stakeholder expectations. In the five years, we’ve been tracking this sentiment, 2017 represented the lowest stakeholder perception of Internal Audit value.”

The survey shows that  only 44% of the surveyed stockholders reported that internal audit contributes significant value! To understand how bad this is, just compare it to the 2016 survey results of 54%!The study suggests that ,among other things, ongoing compliance burdens and pressure to do more with less have contributed to the decline in the perceived internal audit value. The study also shows that only 9% of the surveyed respondents consider internal audit as a trusted advisor! PwC recipe for an agile internal audit is to be prepared & adaptive.

The Protiviti survey which deals with “Data Analytics", shows that while Data analytics is gaining a foothold in internal auditing, most internal audit shops are still in their “analytics infancy”.! To put things into perspective ,Protiviti survey shows that 90% of the respondents rated their data analytics maturity between (initial – defined),while the remaining 10% rated it between (managed – optimized)!The picture is not brighter when it comes to continuous auditing!The survey reveals that:

“The use of continuous auditing remains surprisingly low, only 37% of all internal audit functions that utilize data analytics employ continuous auditing.”

I hope that these two surveys serve as another wake-up call to internal auditors. As I said in one in my tweets:

“The greatest risk to internal audit remains the traditional, unpragmatic  & uncreative mindset of internal auditors!”

There is no substitute to courageous, committed  and visionary internal audit leaders to reverse the results of the surveys and “make internal audit great again”!!

These are my thoughts, please share yours!

  

Are CAEs Finally Managing & Leading IT Audits?

A joint Protiviti /ISACA webinar (Today’s Top Technology Challenges and the Relationship to the Audit Plan) discussed the results of the latest IT Audit Benchmarking Study from ISACA and Protiviti. One of the top findings that I found interesting and promising is that CAEs are now more involved in the management and leadership of IT Audits.

 The survey report indicates that:

“ a small but increasing number of IT audit leaders are reporting directly to the CEO. In these instances, it is possible that the CAE is serving as the IT audit director, which is a positive trend as it provides the IT audit function and responsibilities with greater visibility and stature. It also is a logical progression given how more organizations have become increasingly technology-dependent, driving the need for the technology-savvy CAE to also serve as IT audit director. More CAEs are now assuming this role, which can be advantageous because, among other reasons, skilled and experienced IT audit directors are hard to find.”

The report also mentions that:

“Overall, with more organizations and internal audit groups becoming increasingly technology-centric, it  is a natural progression for CAEs to assume IT audit leadership roles.”

Another encouraging sign is shown in this paragraph of the report:

“We also find that in cases where the IT audit director is not attending audit committee meetings regularly, the CAE usually has sufficient knowledge to discuss IT audit matters with the committee.”

Does the above reflect a continuous trend? Only time will tell!

A couple of years ago, I suggested that The IIA & ISACA merge! I still believe it makes sense and it would certainly add flavor to both institutions!

These are my thoughts, please share yours!

Internal Auditors & Self-Destruction!

Do some internal auditors come equipped with self-destruction mechanism? Sadly, the answer to this question is yes! Recently, a member of my LinkedIn group “Internal Audit & Risk Management Consultants” Posted a discussion enquiring whether internal audit can answer an internal control questionnaire on areas other than internal audit such as HR and accounting.The discussion was very popular with many internal auditors offering their cliché answer:

“Internal Controls are the responsibility of management; Internal Audit should not complete the questionnaire.”

And of course, the justification for this answer was that completing the questionnaire impairs internal audit independence!Once again, some internal auditors try to hide behind independence and elect to do nothing and prove over and over again that internal audit can be stagnant and irrelevant!I was so frustrated with most of the comments to the point of saying in one of my updates:

“Comments posted on a discussion on my LinkedIn group confirmed that the worst enemy of internal audit is internal auditors themselves!

Assuming that answering the questionnaire impairs independence, internal auditors should not push the self-destruct button and stop at providing their cliché answer.They should recognize that their insight and experience are needed, and they should be creative in finding an alternative way to participate and add value!

Wishing you all a successful and happy new year!

The Internal Auditor is Now Available on Amazon!

The Internal Auditor (short fiction) is now Available on Amazon for Pre-Order! Below is a link to order:


                           Amazon Canada


You can also order it from other Amazon Country websites depending on your Country.

My Thoughts is now on Amazon!

I have combined my internal audit posts from 2011 to 2016 in one document. It is now available at Amazon for only US $3.If you find my posts interesting, this document will be a useful tool to access the posts. It can be bought using the below link (Amazon Canada) or the Amazon webpage for your Country:

                                            https://www.amazon.ca/dp/B01N591VRA

The Internal Auditor

Would the new #CAE survive office politics and ploys? Stay tuned to my first #internalaudit short fiction coming soon (will be available on Amazon during January 2017)

A taste of what is coming ( I will be looking for a professional editor soon):

"It was supposed to be another routine day at the office for Steve Anderson , the newly appointed Chief Audit Executive (CAE) at the Advanced Technology Corporation. But in reality, there is no such thing as a routine day in the life of an internal auditor! When Steve arrived at his office at 8:00 am on Monday he had received a call from the assistant of Mike Smith, the Chief Financial Officer (CFO), asking him to come and meet with her boss urgently.
Steve joined the company about a month ago after working for a medium - sized accounting firm in the city for about five years. Ever since he had joined the company, he tried to establish communication channels with management members to help him introduce his vision of internal audit and to obtain a better understanding of the business and management expectations. One of the hardest people to connect with was Mike Smith who usually gives Steve the cold shoulder and does not show interest in the internal audit activity. So today’s call from Mike not only came as a surprise, but also with a lot of skepticism!"

http://www.bibiconsulting.net/The-Internal-Auditor.html

Let's not Glorify the Fraud Culture!

 Recently, I have been watching some interesting TV shows!The common theme of these shows evolved around fraudsters and con men who are portrayed as being smart and charismatic with exceptional talent. Some are portrayed as the go to experts to solve problems that can't be solved by hard working honest professionals!They are presented to be the solution rather than the problem. The sad reality is that it is easy for most of us to admire such characters and fall in love with them!

The Dangerous Message!

While the purpose of the shows is to provide entertainment, they are also sending an unintentional dangerous message to the youth that being a fraudster is actually a "cool thing". It is not a secret that at this era of rapid technological advancement the difference between what is real  and is virtual  and fiction may not be so obvious to some!

It All Starts at Home!

Fraud will always be out there and it will be evolving contentiously .We can not completely eliminate it, but we can fight it before it becomes a monster ( if it does not already became one in your country). We can only do this by starting  at the source, our kids!

 Preventing, fighting  and building awareness about fraud starts at home at an early age. Parents need to keep a close eye on what their children read and watch and who their role model is.
 A few years back, my teenage son expressed his desire  to become a broker after watching the Wolf of Wall Street movie! It took several rounds of discussions to explain to him the difference between an ethical broker and a bad one.

Let's not glorify the fraud culture and start to build an anti-fraud one starting from our homes!

These are my thoughts, please share yours