What audit is about
Most of us familiar with the (internal) audit profession know what it is about. I’m not rehashing the excellent definition of the Institute for Internal Auditors. As auditors we need to use our independence to objectively gather, analyse and test facts and figures on the organization’s governance, processes, risk management and controls through the methods and tools at our disposal. Based on the understanding gained in this process we can then assess the performance of the organization and make recommendations to improve its functioning.
These are the cold, hard facts of the profession of internal auditing. We may differ in slight ways in defining what we do, but this is about it.
However, is it?
Where’s the end of the line?
Audits too often end there, by stating facts, but often lacking context. This can lead to significant misunderstandings by those who are confronted with that information, such as the members of the audit committee or the auditees.
The objectively gathered, analyzed and tested facts need context. And to position facts correctly in context, you need narrative. Thus, the end of the line is not establishing the facts and figures alone. At least the Chief Audit Executive needs to be able to convey in an accessible way not only the facts, but also the context in which these facts need to be seen.
Let me illustrate (and I’m heavily borrowing from Stephen Covey for this example)
Read the following phrases one by one and try to “feel” a reaction to them:
“The man did not seem to notice his loud cousins on the subway.”
“After having lost his brother and their father, the man did not seem to notice his loud cousins on the subway.”
You have noticed the second part of the second sentence is identical to the first sentence. But because of the added context, it creates an entirely different sentiment about what is written. But the words written are exactly the same.
The strength of the auditor
The strength of the auditor is not only determined by the quality of the analysis, but by the ability to convey facts in context to his audience of audit committee members and auditees. Weaving context and facts together with narrative is what storytelling is all about. And storytelling is not only about fairytales.
The true bard
Only the true bard will have the ear of the king. The true bard should be the internal auditor, bringing the king, the audit committee and the board key information and insight, unburdened by hierarchy, like the joker did in the Middle Ages. But to get the king’s ear, you needed a good story. Or you needed to be funny. But any stand-up comedian will tell you it’s impossible to be funny without a great story.
Think about it
Consider your audit planning phase. Does your proposed audit planning sequence make sense, even to those not necessarily familiar with all the technical aspects of audit planning? You should not only focus on what you will be doing and how. You need to explain the audit committee members who will approve your planning why you are proposing the audits you are proposing.
Consider the audit execution. The how is often quite easy, once you have determined what you want to audit. But do your audit collaborators understand why you ask them to execute the work program steps you task them with? In essence, are they just putting one brick atop another one, or are they building a cathedral?
What narrative brings
Well developed narrative in a story lends credibility, recollection and relevance to your audit findings and recommendations. They will be remembered more easily, and will in turn lead to better communication to and with the audit committee and the board. They will be able to send a clearer message to the management team, which ultimately may enhance adoption rate of recommendations and even implementation speed.