Pow-wow

Internal Audit partner and his client, the CEO had arranged pow-wow among their teams to encourage an open discussion on the bitter auditor-auditee relationship. At the pow-wow, the marketing manager made a remark that although one should never minimize findings or neglect ones obligation to report accurately, too many internal auditors needlessly drive a wedge between themselves and their auditees by presenting findings in a way that belittles the auditee instead of treating findings, analysis, presentation as an opportunity to address problems and to facilitate improvements. The purchase manager added that internal auditors always act as policemen and come with backing of authority.

To this, one audit manager answered that the business managers will have to begin to look internal audit as an objective consulting group and not just an independent assurance group. Answering to the concerns of the marketing manager, he said that part of the problem is that internal audit also has a stereotype like business managers and an education process is needed for both, the auditor and the auditee. He also said that our source of authority is our ability and independence whereas business managers think that we are in the organization to appraise them for their performance and thus our reports with suggestions are treated as report with coercion by them.

The CEO said that Internal Auditor should keep management informed of the progress of their work along the way. Letting management know what they are finding allows them to take action and fix problems while the audit is still in progress. We need 'No Surprises'. Also, internal auditors don't leave considerable time open in the audit schedule so that we can make special requests.

The IA partner replied that our terms of reference and scope should be clearly interpreted as the management inevitably try to prevent audit encroachment onto the 'management patch' and thus try to restrict us to the policeman's role, whereas we view our role as that of the independent reviewer covering all areas and levels of operations, decision making and governance. We agree that Internal Auditors should employ a just-in-time approach in setting up their audit plans for adjusting special requests of its clients, but at the same time, they expect from auditees to co-operate and respect their time.

The CFO said that both auditor and auditee have their own perception regarding one another's needs. Also, they have an expectation as to the nature of their relationship. I have closely seen both the sides in my life. This bitter relationship soon motivates young internal auditors to seek career elsewhere. This is also one of the reasons; the audit industry is seeing a huge turnover of young professionals. Internal auditing's success in the next millennium will depend on providing its audit clients with unique and exceptional services. We need to listen to each other innovatively. Such pow-wow is definitely a step in this direction. The pow-wow continues...