Monday, 23 October 2017

Board Expectations on Internal Auditors

I was invited to be a panellist at the 2017 Institute of Internal Auditors Malaysia National Conference recently. The subject given to me was the expectation of the board and the C-suite on internal auditors.

Points which I shared were:

Internal auditors have to demonstrate that they understand business issue beyond matters relating to the companies they serve. This means they must understand what is happening in the business landscape, their industries and key stakeholders such as customers, suppliers, competitors, regulators and NGOs. Only with these cumulative knowledge, internal auditors are able to discuss and flag issues from various perspectives and angles.

Given that board members consist of people from diverse backgrounds, having the ability to engage them in meaningful ways would be important to gain their trust and respect. Once trust and respect are given, they would be more open to listen to the issues raised and recommendations made by internal auditors. How issues are prioritised and discussed would be amongst the ways to improve engagements. 

Focus on matters which would make them stop and think and don't waste their time by raising a long list of issues where 90% of them could be resolved quickly by management. Always angels issue from the perspectives of director, especially they risks which they have to deal with if no action is taken on the matters discussed.

Another key point which was raised by another panelist was the depth of knowledge and expertise which internal auditors have. If they are expected to deal with more strategic issues, are they in the position to add more value than those people in the C-suites who are dealing with strategic issues as their day jobs? This is fairly high order but internal auditors have to address such needs if they want to earn the trust and respect of directors and management.