Creating a High Performance Audit Culture

Merely keeping and acquiring staff is no longer a sufficient approach to talent management because the “right team” concept is not static anymore. Internal Audit faces increased stakeholder demands for expanded coverage and demonstrable value plus demands to broaden its risk coverage to include strategic risks. As a result Chief Audit Executives (CAEs) must ensure their teams have a new set of skills to be successful including business knowledge, critical thinking, and communication skills.

However, most audit departments continue to recruit and develop traditional audit skills or take a piecemeal approach to building new and necessary competencies. By contrast, the best audit departments are re-thinking their previous approach to training and development, and focusing on building and recruiting for a new set of skills.

Recruitment and hiring
Leading audit teams require excellence in three core skill areas to be effective in the execution of every audit engagement and also to be strategic in their overall risk coverage. These are shown by ADR research to be:

• Accounting and internal control knowledge – while not every auditor needs to be a qualified accountant, he or she must still have a foundational knowledge of accounting, financial statements and organisation structure and workflows,
• Business acumen – excellent auditors possess a deep knowledge of their industry and company dynamics so they can understand business issues, problems and suggest solutions. For example, great induction programs explain to new auditors how the company makes money – a small but essential piece of knowledge often omitted,
• Risk assessment – auditors need to understand various risk assessment frameworks but also have the ability to apply those techniques in practice to accurately identify real problems and suggest effective pragmatic solutions.

Leading audit departments are finding innovative ways to bring these skills into the team while maintaining the foundational audit capabilities upon which the department is built. Many CAEs comment that it is relatively easy to teach audit skills to experienced new joiners who move from another discipline or function.

Rotation programs that move staff, for a defined purpose and period, into and out of audit are increasingly being successfully deployed. These programs work best in partnership with HR support and often include short-term guest auditor programs. Another option is the judicious use of co-sourcing with a third-party firm to bring essential skills or additional capacity into the audit team.

To be attractive to top performers, CAEs must also ensure that their department is seen as an attractive career option. This demands that the “brand” of Internal Audit must be clear and strong when viewed by internal candidates and externally from the market. Audit needs to be seen as a good career choice for high performers. Leading CAEs build a pipeline of great candidates wanting to join audit.

The external recruitment market remains tough in many geographies. While a depressed economy may suggest a good choice of strong candidates, this is not always evident. The reasons vary and include continuing economic volatility, which makes some candidates cautious about moving. Similarly, companies are using contract terms including lengthy notice periods to retain top performers. There is strong outflow of skilled staff from some struggling economies to better performing countries, for example from Portugal to Brazil.

Training & development

Audit executives are challenged to educate and upskill staff that range widely in terms of experience, role, and expertise, all while keeping costs at bay. Leading audit departments focus on building a combination of behavioral and business knowledge competencies, in addition to technical expertise, that will improve the individual’s and function’s effectiveness. Development options must be varied to suit individual learning styles and preferences. Leading CAEs give staff the responsibility to plan and manage their own development path.

What is ADR doing for members?

ADR Research: The ADR topic centre on Talent Management is a rich source of material, best practices and case studies. The 2011 meetings series focused on Talent management.

ADR benchmarking: Review and utilise results from our 2011 Audit Budget and Headcount benchmarking survey on auditor skills, education and activity. Participate in our 2012 Audit Budget and Headcount survey.

ADR Webinars: Listen to the replay of our recent webinar on Managing and Engaging Co-Sourced Resources to Support Audit Work

ADR Training: Use the ADR online training resources which has over 140 hours of online training available to members—recently expanded with new courses on fraud, spreadsheet controls and effective writing.

ADR Discussion forums: Share questions and opinions with over 660 peers on the Head of Audit Discussion Forum

In addition to these ADR resources, CEB offers other talent management research, benchmarking products, and services. These include recent research into building better recruitment processes and identifying the attributes of world class global leaders. We can also deliver cloud-based solutions for talent assessment and decision support for assessing and managing employees and applicants.

If you would like to comment on this blog or want further information please contact Ian Beale