An internal auditor explains how he’s been able to not only provide assurance but also add value in other ways.
Even before the onset of the pandemic, the scope of just about all corporate functions was widening. New regulations, new technology and new cultural trends (read: reputational potholes) all tended to have people doing more with less. That’s why creatively sharing the load can work best and where one function, internal audit, has found it can add extra value.
- This was the case for one internal auditor, who recently presented at NeuGroup’s H1 Internal Auditors’ Peer Group meeting. The auditor showed how he was able to help out several functions doing parallel tasks by offering to take over some of the load. But generally, he said, the best way to demonstrate value of IA “is to be creative.”
Service offerings. One creative approach for this presenting auditor was to come up with a variety of ways to help different parts of the company. He created a “portfolio of services”—including “bread and butter assurance reviews”—for areas including insurance, sales and legal.
- In some cases, he and his team would do “design reviews.” After a process was created and implemented, he would offer his team’s thoughts on the project’s designs and controls. There were some who wanted IA to come in and do that task at the outset, but he felt that might be a conflict of interest, leaving IA open to claims of bias or of compromising its objectivity.
- The auditor called these projects “freebie audits.” He and his team would “go in, if [as auditee] you know you have issues” and using an audit approach, “letting you assess yourself using our framework.”
- One caveat, he said, was that the auditee preferred this method to a regular audit. “You have to be careful how often you offer this, otherwise that’s all anyone wants to do,” he said. He would also execute a regular audit a year later, particularly if something questionable came up during the freebie.
Clawing back dollars. The auditor also said he has been able to add value by doing customer audits for the sales team. The company changed business plans in the last year or so, adding a subscription and licensing business, which meant checking to see if licenses were up to date. He called this the “poster child” of his audit initiatives.
- With this initiative, the company was able to recoup $60 million in expired license fees, which “paid for team cost multiple times over,” he said. In the past, the sales organization was doing the checking and “half-assing” it, he said.
- “It’s been tremendous for us in terms of sales organization and reputation,” the auditor said, and highly recommended “auditing anything that is recovery-based” and then promoting that as a marketing tool.
- These customer audits also led to a partnership with legal, which had been leading the effort of ESG reporting of the company’s vendors (i.e., checking to see that vendors were complying with the company’s ESG mandates). IA, which already routinely does third-party audits, offered to help with the ESG reporting at the same time.
Better audits. The auditor gets creative by doing a little background to ferret out any issues he can bring up with any areas undergoing regular audits. “Start with the why, not the what—that helps relationships,” he said, adding that in turn, better relationships help with future audits.
- “When putting together audit plans, I never ask for input from the business without having a pre-set list of things I believe ought to be audited” and why, the auditor said.
- He added that without a specific list and justification of “why,” the audit isn’t as robust. “In my experience when I ask for input” from the auditee, “I get nothing of value. But if I go out with my plans, conversations are more productive.”
