Audit Culture Reimagined

It’s frustrating to watch an audit department fall apart. I’ve seen it happen several times in my career. In my personal experience, it happened when our chief audit executive (CAE) was promoted, and her replacement had a less visionary style. In the course of two years, the department of 45 auditors had 70% turnover.

More often, I’ve seen it happen in departments that refuse to change. Audit management gets stuck in a routine and loses sight of the big picture. The early warning signs are a restless staff, arguments of seemingly meaningless details like fonts used in reports, and stagnation in development. Before this happens, we need to proactively assess the culture of our department.

I suggest a two step process. First, take a hard look at the feedback style perpetuated in your department. Then, perform a skills assessment for the department to determine where improvements need to be made.

Changing the feedback style

The first part of this process is really hard. Are you leading from a positive or a negative position? If you rely solely on negative feedback as a management style, it’s time to change. Look at the evaluations that are being produced in the department. If the content is mostly a list of errors made, the feedback is negative. On the other hand, I’m not suggesting that the evaluation should only highlight everything done right. I’m recommending the evaluation be used as an education and training tool. I’ll give you an example.

Negative Feedback: On three occasions, I noted that Bob did not provide enough supporting documentation to reperform his test.

Educational Feedback: Standard 2330 in the IPPF says that Internal auditors must document sufficient, reliable, relevant, and useful information to support the engagement results and conclusions. While it was noted on several occasions that Bob’s supporting documentation was not sufficient to support his conclusions, we worked together to help him understand the level of evidence that was required.

We need to treat each other the professionalism we give to our auditees. Not everyone in our department walks in knowing everything about audit, especially in department’s with rotational staff. Instead of constant criticism, we should offer consistent education and mentoring.

Perform a skills inventory

If you have not seen the document before, you should take a look at The IIA’s CBOK report on audit competencies. The study shows that communication is the top skill needed by audit staff. Communication skills show up repeatedly in the study is different areas. So how are you addressing your staff’s training needs? How good is your department’s communication skills?

To perform the skills inventory, you should have the staff listing with the at least the top ten skills listed out. Next, rate each person on a high, moderate, low scale for each skill. In the end, this is going to resemble a risk assessment, so you should be pretty comfortable with the format.

Use this assessment as a basis for both the Educational Feedback you are providing to the staff and when you are planning out your training program for the year.