Asking the essential questions
A question we almost never ask ourselves as chief audit executives or internal audit directors is how motivated our staff are to audit a certain area. The reason our teams may not be motivated is actually rather simple, but not easy to accept: in our audit preparations, we often fail to identify the correct question that should be central to the audit. We are often unable to identify a “research” question that is truly relevant for our stakeholders.
Busyness is not relevance
With the tools we currently have at our disposal, such as computer assisted audit techniques, prewritten detailed audit work programs and electronic workpapers there is a significant risk our auditors will go through the motions of the audit. But audit busyness is not an adequate substitute for having asked the wrong question to begin with. I’m not implying our teams deliver sub par work. On the contrary, the work will most likely be fine, it may even be excellent. That is not the point. The point is that the work may not be relevant to begin with. We may be very efficient but not very effective because we are not addressing the true concerns of the board.
The relevance of the question determines the focus
And if why we are auditing is not clear, or what board or management concern we are addressing is not clear, shouldn’t we ask the question why we are performing the audit to begin with?
I can imagine quite a few of you, dear reader, reacting that this may be due to a faulty risk assessment. Perhaps, but I am not so sure. You may consider it could be caused by an incomplete work program. Again, certainly possible, but I’m not sure about that either. What I do know is that there are many reasons why an audit may not go entirely as planned, but there are but few why an audit may not be conducted with a focus, an interest and an enthousiasm that is usually the hallmark of a team of good auditors working on an interesting audit.
Taking the time to develop the question
One of the only reasons that could be the case is because the question underlying the audit is not interesting nor deemed relevant enough. And if that “research” question is not interesting enough, that is usually because no one bothered to take the time and develop it properly.
Are you aware that as chief audit executives, you are in a manner of speaking sitting on top of the most important source of research questions about your environment? That source is your board, and perhaps you should take the time and ask them what they deem important.
Just ask them
With budgets getting more constrained, and value for money being high on the agenda of any organization, internal audit comes under pressure to make sure it appropriately adds value. As an assurance provider, its main mission is to the board. So why not just ask them?
Active participation in the risk identification and analysis
Our board will be actively involved in the risk identification and analysis. While they will not be the sole source of information, we most certainly will ask them what keeps them awake at night. Perhaps their issues are less operational than we would like, or maybe they are at a higher level than we are used to working with.
It then becomes our responsibility, as internal audit, to translate those concerns to auditable subsets which then can be validated by the board as a correct translation of their concerns. We need to assist them in ensuring an as complete as possible overview of relevant risks, and it is our responsibility to inform them, even teach them, about prior issues we have encountered.
Only when we start doing that, when we start addressing key board concerns through active involvement of the board in identifying what we need to provide them with assurance on, we will be able to ensure proper research questions form the basis of our audit activities.
And as a chief audit executive, what do you want your team to do? Do you want them to stack stones on top of one another, do you want them to build a wall, or do you want them to construct a cathedral?