How many times do we internal auditors get flattered by laurels such as this one? They come in plenty and in many forms if you had been noticing and keeping track of them! The meaning behind is plain and simple, stop being a pain in the a**; the internal auditors not backing down from their kick a** reputation. Yeah, my sorry executives, the joke is definitely on you!
It’s not an everyday feat, that one could win over laurels like these. And it definitely sounds prestigious when a so-called executive is compelled to vent it out in writing! Yeah, you heard that right, not a verbal onslaught, but a written compliment. One that could remain a part of the records, forever and which mind you, is sure as hell a better reference than any other references put together!
Recently, I had the privilege of experiencing it firsthand. While I did find it very distasteful and even provocative initially, I enjoyed the fact that someone couldn’t take the pressure anymore and lost his cool and composure and what’s more? It’s on record.
But what I liked the most about the situation is the fact that I kept my cool and didn’t give into the temptation to respond to it in kind. Apart from responding to it, I could’ve escalated it through my functional reporting line to the functional authority over internal audit. But I decided not to for reasons I prefer to keep to myself. Let’s just say it’s for the greater good!
Now let’s see why it came down to this because it’s imperative that internal auditors understand what the triggers for such situations could be, so that these could be managed in the best possible way and see how auditors could navigate through a difficult client-auditor situation and might even win without fighting!
It’s also important that internal auditor’s brain is hardwired in assessing every situation, trying to find the root cause of any event. Not because a remedial action could be advised since it’s not a classic audit report or finding we’re talking about here, but because of the opportunity to exploit these to our advantage.
So, my assessment of the background and the triggers that led to the situation revealed the following:
- Belief that an overview or skimming through technique is enough to understand the business systems and processes as against a detail oriented approach which can be done in a piecemeal manner as and when the need for it arises.
- Belief that internal audit doesn’t need to be allocated a spot at the executive table. Yeah, this belief is still pretty commonplace and maybe that’s the reason why regulation ensures a spot for internal audit.
- Belief that management does not have anything to do with internal audit and that it is for the Board to deal with internal audit, even if it is facing issues of non-cooperation with the management.
- Belief that policies and procedures are the root cause behind slack rather than the people entrusted with their enforcement. So, getting the work done is important even if it compromises the compliance requirements.
- Belief that everything that was being done by the executive’s predecessor was wrong, even if the entity continued to exist for several years on his / her watch.
- Belief that positions are important rather than the people, as it is positions that make up the control environment (read organizational culture) and not the people. So even if some people compromise their positions for their personal benefit, the important positions will still have those people.
- Belief that nothing is as big and important a task than whatever the executive is doing and that nothing else matters than what the executive believes matters!
- Belief that everything else can wait, but what can’t wait is the executive’s assessment of the work that’s to be done.
So on and so forth.
The plain reason this accolade was sent my way was that the newly appointed executive never got the time to understand the review and reporting process I was following, which was part of the audit charter approved by the Board years ago! And instead of recommending a review and a revision to it, (if there was a problem with it) a compliment was given in writing.
There were a couple of other plain reasons contributing to this as well:
- Not understanding what a systematic and disciplined approach which is a testament in itself to the quality of experience and exposure the executive had. Internal Auditing works through a formalized and fully documented work methodology, reviewed and approved by those charged with governance.
- Not comprehending what is entailed in organizational independence and individual objectivity which shows that the executive has no regard to the working boundaries, delegation, trust and organizational structure. Internal Audit is professionally and existentially required to be fiercely independent and uncompromisingly objective. But these require cooperation, not intimidation so that it could influence improvement and not be influenced.
- Not having any idea about Governance (Board’s Oversight), Risk Management (Management’s mechanism for accomplishment of objectives) and Controls (Management’s means to accomplish objectives) (GRC). Because if the executive even has a basic understanding of the GRC principles, it would be clear that these principles need to be upheld in letter and spirit for any entity’s continued existence and sustainable growth. Do I need to remind here who’s responsible for reviewing and helping improve GRC processes?
But is it realistic to expect all this from executives who can’t understand what internal controls are and why do they exist? Can we expect fraudsters, cheats and bootlickers enrolled in senior management committees entrusted with the responsibilities to implement control activities? Yes, certain executives can! Those who don’t understand what a control environment aka tone at the top is!
And by the way if you think this could be a peculiar situation, think again! Because had it been, the control environment would never ever have been a part of the internal controls integrated framework by COSO. And definitely would not have been at the top!
So, my dear fellow executives, it’s not upon the internal auditors to make sure that you have adequate experience and exposure or to feel sorry if you had been unable to work for any better organizations in the past?
If you haven’t seen formalized, documented and detail oriented processes before in any organization, maybe you never had what it takes to be an executive. If you were unable to make the most of the time you spent while being at any responsible position in your previous organizations maybe you’re not cut out for senior management positions.
If you were dumb enough to not understand how things are, it isn’t upon auditors to break these down to you so that these could start making sense. And please remember to keep cool. Because once you maintain it, it might be the only real talent you have amongst your otherwise bloated self-assessment!
And you know what? It would be a lot wiser and sane if you stopped wishing and praying for the resistance around you to leave just because you’ve set foot and want to bring your comfort zone along. Don’t make it a kingdom of the dumb!
Instead see yourself in the mirror, man up and leave because you’ve…. lost it!
And dear Boards, please cut your Stockton Rush type of executives loose if you don’t want to lose the worth your shareholding represents!