Internal Auditors are meant to be people of principles and not people of circumstances. But what to do if circumstances force them to compromise on principles? Should they cave in to the need of the hour taking an impaired view of the principles? Should they concede space to expediency when it flouts principles? Or should they simply go rogue, drawing a line for themselves?
Let’s first understand why, why should and how principles matter to internal auditors and answer this once and for all so that any doubts about auditors’ remaining steadfast behavior when confronted with a principles laden situation could be removed.
The Global Internal Audit Standards from The Institute of Internal Auditors do not leave any doubt in understanding “why” and “how” internal auditors conduct has to be uncompromising towards principles. Principle 1 Demonstrate Integrity under Domain II: Ethics and Professionalism carrying standards 1.1 to 1.3 describes the uncompromising conduct and approach of internal auditors towards integrity.
Its demonstration means that it has to be ingrained in anything and everything internal auditors do. It requires this trait to be in-built into the very structure of the internal audit function, so that it becomes the culture, the internal audit team becomes accustomed to, and the internal audit clients can vouch for themselves. It goes on to give elaborate requirements, considerations for implementation and evidence of conformance making it incumbent upon auditors that integrity as a core value needs to be inculcated into internal auditors’ approach.
The Standards also address the “why should” principles matter part. While introducing the domain it’s mentioned that conformance with these principles and standards instills trust in the internal audit profession, creates an ethical culture within the internal audit function and most significantly provides the basis for reliance on internal auditors’ work and judgment. This essentially means that unethical conduct on the part of internal auditors could provide justification for not using their work.
Let me decodify the meaning of it all, which may be hiding in plain sight. Principles are the hallmark of professionalism internal auditors are required to be known for. These are how you essentially distinguish an internal auditor from amongst people that may or may not be professional. These are thus what an internal auditor is made up of and what an internal auditor is!
Fellow internal auditors or client managers reading this, if there’s still any confusion about this or if you think it’s all theory or an ideology at best, which might or might not apply in practice or might have to be interpreted to mean anything in practice, you’re grossly mistaken. What’s required is demonstration of the belief in principles, one holds sacrosanct in individual capacity and private dealings, in the professional realm and official capacity.
The official you can’t be a different personal you, except of course in a more considerate and unrelenting manner towards principles because of the trust we hold and are responsible for in discharging our official duties being custodians of assets, process owners, budget holders, resource planners, managers, task owners and everyone. Can you expect a security guard manning a facility you own compromise on principles allowing even a single exception to the access control system?!
There’s no work without work ethics!
Demonstration of allegiance to principles is not done through sloganeering or display of pretty messages on standees or hung on walls of visitor waiting rooms, conference rooms or hallways leading to offices of top management executives. It’s the actions that ascribe meaning to words. If the actual conduct is not walking the talk on principles, you aren’t demonstrating these, but yes, you’re demonizing these!
But since managements are usually in the business of having and using (read abusing) principles as mere rhetoric, it is left upon the internal auditors to light a candle and keep the flame burning. The task isn’t easy as it is nothing short of a fight, because by doing so the auditors uncover misdeeds and become a mirror for managements’ wrongful actions and inaction. No one likes a mirror on misdeeds!
It’s best to have the kind of internal auditors who fall in line with management’s decision making on everything and especially its stance (compromise) on principles. This becomes important if it’s the auditors who flag an issue with the conformance to principles. What begins as mere downplaying goes on to become a bone of contention if the auditors don’t back down.
Firstly, in management’s perspective, it’s unexpected of auditors to even flag such issues and if they (while not being in their right mind of course!) do flag something of the sort they are expected to play along with what management decides to do or not do about it. Because why not? Afterall, they are considered to be the underdogs.
Don’t believe it? Well, it holds true for a typical control environment, and a typical control environment means that it is what’s expected to be the norm with a few out of the world exceptions. Still don’t believe it? Try to flag such an issue and find for yourself!
When it comes to principles, I have seen control environments made up of unqualified / unprofessional people and those made up of people having fancy qualifications with an extremely professional aura around them behave absolutely alike and absolutely disgusting. It’s like conformance to principles in official duties somehow brings out the real and the worst human in everyone!
The question is what makes managements believe:
- There’s an expected behavior for internal auditors?
- That internal auditors could be subscribed to anything but principles like them?
- That internal auditors are somehow required to conform to management’s assessments especially when confronted with issues involving principles?
- That internal auditors will come around and toe the line chosen by management?
The simple answer to these “in the money” behavioral expectations from internal auditors is that there’s a lacking on both counts, management’s experience of internal auditing and experience with internal auditors! The real and professional internal auditing and internal auditors! We can be your friends but not your partners in crime!
There’s another non-sensical argument I’ve come across when confronting the management with questions around integrity and ethics; management’s decisions are based on the need of the process or position. Such an argument for someone who can’t rise above his / her person when in a situation to choose between his official responsibility and personal benefit is the stupidest argument one could wrap his head around.
I’ve also been confronted with judgements on “becoming” personal simply because I chose to not let go of the issues I flagged. I have always wondered who’s being personal with the entity in such a situation, the auditor sticking to an issue involving impairment of integrity or management appointed to manage the entity’s affairs sticking to doing nothing about it?
Just recently a friend suggested that the internal auditors need to be ‘managed’. Since I am battle hardened in this domain owing to the everyday fights I would pick on ethics, and thankfully earned more losses than wins, I offered myself. Let it be war, I said!
If integrity and ethics were not part of you, nothing from your ‘treasured’ past experience and exposure really matters! You can take your experience and shove it up your a***! Because the entity you’re serving or planning to serve will be a lot worse than it is or would be with you!
And dear fellow internal auditors; you are better off alone; a lone wolf is better than a compromised sheep!