Internal audit and value

Organizations are changing at warp speed. To keep up, internal audit needs to be agile, responsive, and focused on value delivery — and the right metrics can reinforce the desired value-based behaviors. 

 Internal auditors must first understand what their stakeholders want and how they view value, and then measure against those wants and expectations. But the reality is that some stakeholders may not understand the breadth of capabilities a modern internal audit function has, or may even want a less aggressive function that doesn’t challenge the status quo.

 In such a situation, stakeholder expectations may be significantly lower than the role described in the Mission and definition of internal auditing. The opposite is also possible, with stakeholder expectations far exceeding a reasonable performance level.

To make it even more challenging, expectations might vary for the board versus senior management. Boards focus more on assurance while management primarily seeks new insights from internal audit.

 Value is often in the eye of the beholder and not easily quantified.

 Many Audit Managers presume they can measure value by asking clients if they have received value from audit work performed -audit surveys.

The challenge is that client responses may be skewed by their emotional reaction to a recent audit. Or they may not have a reasonable or best-in-class expectation so their feedback may be based on flawed criteria.

Additionally, surveys may be asking the wrong questions by inquiring about audit processes rather than value received.

 Today, value can only be delivered when internal audit innovates in who it hires, what it assesses, and how it executes and communicates; understands and aligns with organizational strategies; and has a laser-focus on critical and emerging risk areas.

Value is in the eyes of the beholder, so what do they behold?

Ask questions like these:

1.   Is it easy to understand internal audit’s communications? Do they work constructively with you, listening effectively, to achieve your shared goals for the organization?

2.   Does internal audit have the people they need to deliver the greatest value to you and the organization that is possible?

3.   Does internal audit provide you with the assurance, advice, and insight that you need?

4.   Has internal audit done work you wouldn’t pay for?

5.   When internal audit makes recommendations, are they constructive, practical, and of value? Do they help you and the organization succeed?

6.   Is internal audit focusing on what matters to you and to the success of the organization?

7.   Has internal audit done work you didn’t think was valuable? What was that?

8.   Do you trust the leader and staff of internal audit?

9.   Do you trust internal audit’s assessments

10. Would you consider hiring them?

11. Would you prefer to cut, increase, or maintain internal audit’s budget at current levels?

12. How else can internal audit help you and the organization more?

Is it necessary to quantify the value delivered by internal audit? I don’t think so. I think these questions are far more revealing (and trusted) than any number.