I had an occasion to interact with one of my private sector colleagues the other day. Now it was nice to have a different perspective. What I noticed most was the different language.  Who uses the phrase ‘M&A activity’ as a general term?

I am conscious that as an accountant, internal auditor, IT auditor and perhaps most salient of all an MBA graduate, I speak in a number of different lexicons. I have always been conscious of this though and I have tried to speak a single language, that of common sense. I am not always successful as my oldest friend, a musician, takes great joy in pointing out. We are not always on a level playing field (sorry!).

This week seems to be a language issue week though. I was accused earlier in the week of having used jargon words in a particular setting. Now I don’t think the words I used were, but they were obviously outside of the frame of reference (sorry!) of the people I spoke to. The words were ‘commodification’ and ‘instrumental’. Sorry, I forget to mention I am studying marketing as well, hence the use of these. Again I felt they were used in a context-specific way to address the issues being discussed. But it is interesting that they stuck in the memory of those I spoke to.

I am not sure what the lexicon for internal audit is. Perhaps I use the word risk or risk-based more often than usual. I am aware I think systematically and in an organised fashion, and perhaps see things from a ‘control’ view more often than not.

Now, going back to my meeting with this private sector person. You can tell a lot about a person and their professional ‘upbringing’ from the language they use. I could tell that they were definitely steeped in private sector financial accounting because their view of the business came from a concern for the financial reports and financial controls view. Now that is not a bad thing. One would hope that any finance function would seek to have people concerned in this way. It struck me, however, that internal auditors need to be organisational and professional chameleons, we need to talk HR to HR people, IT to IT people and marketing to marketing people. We need to understand these professional perspectives, even if we do not, in all cases, validate them for all situations.

I have long advocated that internal audit is a professional mindset and a way of thinking and doing that can be overlaid on any other form of profession training, in my case finance, to deliver internal audit of a particular flavour. I also advocate that the steering strategic core of an audit function should be multi-skilled, as I would for any generalist, including a senior manager. For this I recommend a generalist MBA.

Going back to my private sector colleagues. What strikes me, is not just that they use different language, but that that language conveys a way of thinking, a mindset. I am coming to the view that the age of unadulterated private profit needs to cease or be ameliorated. Harvard Business Review is full of the new age of moral business, whether through new forms of charity entity, more corporate social and environmental responsibility, or a form of marketing that considers society as well as private customers. Whether this age has really arrived or not, I am not sure. I do think however, that the balance of power is moving away from corporate entities. It is becoming clearer that the model of undiluted corporate capitalism is becoming decreasingly tenable in its current form (and perhaps trustworthy?) to generate societal and world benefits. As production, knowhow and production become democratised the need to lock profits, knowledge, and assets within the box of corporate entities becomes less relevant. A more feathered edge to the corporate entity is becoming the norm, a reality that the legal profession is, in my view,  struggling with.

Perhaps the real lesson here is that internal audit’s role is to ensure that the corporate entity acts on society’s behalf? That is, they are the in-house version of the societal and customer voice to ensure that corporates act more like the 19th century corporates of the Co-operative and Quaker variety. Perhaps internal audit should be the first to identify the new language of a new business model for the 21st century.

The real risk internal audit should understand for any business is that private profit, unless generated after paying the full, not marginal, social and environmental cost of their activity may just not be tenable in this century.

I think this challenge presents internal audit with a great opportunity and a societal level challenge. Are you ready to rise to it?