A number of recent publications have extoled the virtues of internal audit having a seat at the management table. I don’t agree. I think that a seat at the table for the Chief Audit Executive would probably be the worst place to be. We need to be in the room, but probably sitting on top of the radiator, listening to the conversation, and on a regular basis raising a finger and saying the sacred words, “Yes, but …”
The curse of the “trusted business advisor”
Becoming the trusted business advisor has been a fad for a lot of consulting and advisory organizations for the past 20 years. I know, I’ve had to hear the mantra many times in my years at the other side of the table. I’ve been a consultant. The problem is that it’s a mantra. When asked as to the why, the answer always turns out to be: “to sell more work.”
Anyone speaking about trust without being invited to do so automatically deserves my distrust. I may be cynical, but I’m an internal auditor. I was bred that way.
Let’s revisit the definition of internal auditing:
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
I can’t help but notice that the fifth word of that definition is “independent”. Independence, of course, serves a purpose. I’ve written about that in the past. Independence aims to ensure the highest possible objectivity. And in order to be able to be objective, you need to develop at least some distance to activities of the management team.
I also note the word evaluate which again implies the ability to look at something from a certain distance, without being to distant not to be able to observe it at all (see my rants about where internal audit should be positioned in the Belgian federal government, for example).
Our role, extended
There is another role we have as internal audit, which I have yet to see formalized in the definition. But perhaps I’m reading it wrong. For me, an essential role of internal audit is the following:
As an evaluator of risk management, control and governance processes, we need to be the moral compass of the organization and its management team in a world where competitive and other pressures push relentlessly on the individuals making up such a team.
Where we need to be
I believe we do not need a seat at the table, no matter how enticing it may be for some of us. Getting a seat at the table means sharing the warmth of companionship of your peers which you work with every day. But you’re the auditor, they’re the management. It also means that you may be to close to be able to evaluate objectively. This is called parallax, and it’s an issue in measurement.
However, we do need to be in the room. Perhaps we should be, as I said before, not at the table, but off to the side, sitting on top of the radiator, listening to the conversation, respectfully pointing out where true North is if it tends to get lost.