I heard some wise words this week, in fact ones that stated what I thought I knew, but had not heard overtly said. These were, ‘the success of internal audit is largely dependent on support from the top’.
Wow. These somehow provoked a bit of a damascene moment in me. Perhaps they should not. As an auditor, throughout my career, I have always considered whether my new client gives that ‘support from the top’ and, if not, have avoided working for that client. Where I have worked from those clients, I have experienced that, no matter how energetic, professional, challenging, and delivered internal audit is, it will never be successful.
But by ‘top’ who do we mean? In this case it is meant management. For managers control resourcing, access, culture, co-operation and the seriousness with which internal audit is taken. It takes a wise, brave and honourable leader of any organisation, private, public, charitable or otherwise to set up, resource, and allow to operate a really good internal audit service. Why? A good internal audit service is challenging, difficult, holds all (including chief executives) to account. A good internal audit service is tiring as it has a different focus from management. It focuses relentlessly on the longer term (risk over issues), governance over management, ethics over short term performance, citizenship and environmental performance over profit.
I’ve worked with clients where all the blocks were in place except senior management acceptance, this is tiring for the audit team, exhausting for those governing and most of audit for the management team, who need to waste their precious resources battling with a group that is meant to assist them. If we are unsure which party wins out, see the big corporate and other frauds, there will always be an internal audit team, but they lose against the counter culture set up and imposed by senior managers. Otherwise how would fraud occur on the scale it does?
So when you have a chief executive who recognises the fragility and need for support a good internal audit function needs, embrace them, support them and really cherish their insight and wisdom. For they are those leaders who really take things forwards for the long term, who do the right thing, who really build firm foundations for future organisational delivery.
I remember early in my career a leader of an education client. When I audited their funding claim, I specified that the rules meant that they were entitled to claim many millions of pounds of extra funding than they had recognised. He remonstrated with me, I have not earned this though, it comes via a technicality in the rules. He arranged to repay the money back to the funding body. Now that action took a real public servant and leader (for it was public money). That leadership was not one I would have seen in all of my clients, but it was one that I respected. For he recognised that there is doing what you can get away with and there is doing the right thing. He did the right thing.
Does your organisation’s leadership support internal audit?