Current economics and expectations of stakeholders in today’s business environment have placed the internal audit function for all organization systems in a new and challenging role of providing value to the organization through objective .
Objectivity is a bit of an elusive target. Objective by what standards? By who’s measure? How can you be objective in a very subjective world and produce system reviews that have value for your business?
Unfortunately, sometimes external reviewers are viewed as so objective and data based that they do not see the human impact. Internal reviewers can be perceived as known entities that may be unduly influenced by existing business relationships. Sometimes these perceptions are based in reality and supported by auditor recommendations that are not possible or practicable in a particular organization.
Here are five key factors I’ve identified to help you ensure your internal auditors (and external consultants) can give you the usable objective input you need for your business to grow and succeed.
1.) Determine clear goals on which the reviewers’ can base the audit. For example, a company may have as its goal in an audit of human resources to maximize the utilization of existing talent. This is a related but substantially different goal than elimination of existing positions (and therefore talented people). Reviewer objectivity in either of these examples becomes anchored by the goals of the task. When reviewers use their own objectivity without vision of the big picture goal, objectivity becomes necessarily subjective based on auditor preconceived or arbitrary goals.
2.) Internal systems reviewers report to the management board or CEO. Aside from this reporting relationship internal auditors must have not only real independence, but also perceived independence from line management in order to collect the objective information they need. It seems contradictory, because perception is all about subjectivity, yet taking actions such as nesting your internal audit people in their own area can help with this perception and actually produce objective results.
3.) Independence does not mean control. Auditors and reviewers do not have the responsibility of changing a system, as that belongs to the area manager. Control immediately negates objectivity. Instead, an objective and independent auditor can make recommendations which the manager, in discussions with you, the business leader, can reject or implement.
4.) The people you choose for auditing your systems must demonstrate multi-tiered integrity. While some might suggest auditors and reviewers avoid relationship with line management or employees in order to be objective, this approach can highly skew results with misinformation due to lack of cooperation. Integrity can facilitate professional relationships. Solid, professional reviewers have integrity with you, your employees and in the process and analysis of data and in the ideals of the profession.
5.) Ensure that everyone in the business understands the purpose of the system review. Today’s employees know what audit means, they understand that systems change and they know that you are looking at the bottom line of the company. Communicate your goals. Remember to also communicate how the healthy bottom line of your company results in a positive outcome for you and your employees.
By using these five key strategic points, you’ll end up with objective system reviews or audits that produce practical and possible recommendations and act as a catalyst for improving your organization’s performance.