Determining the Right Rotational Program for Your Department

ADR has just published the first of two parts of research into rotational programs. Part 1 reviews four different types of Audit Rotational Programs and provides help in determining which is best for your department.

• Inbound: Employees from the business rotate into Internal Audit for a specified time, after which the employees rotate back into the business.
• Outbound: Internal audit staff rotate out to the business for a specified time, after which they rotate back into the internal audit department.
• Guest Auditor: Employees from the business participate in a single audit engagement or a short series of engagements, after which they return to their normal position.
• Leadership: External candidates are hired into the audit department and then placed out in the business after a specified period of time.

Rotational programs can help Internal Audit accomplish a number of objectives. However, these programs may not always achieve the desired outcomes due to certain company or department characteristics. To ascertain whether a rotational program will be beneficial to the audit department and the company, the following four issues should be evaluated.

1. Size of the Company and Audit Department
   Only 39% of all audit departments have a rotational program. This number increases as the revenue of the company increases, with 50% of companies with $10 B to $20 B in revenue, 61% of companies with $20 B to $50 B in revenue, and 63% of companies with more than $50 B in revenue having a rotational program in the audit department (Figure 2). Conversely, this number decreases as the size of the department decreases, with only 18% of companies with less than $1.5 B in revenue using a rotational program. Larger organizations tend to have larger audit departments, and it is these departments that have the flexibility and resourcing to more comfortably operate a rotational program.
   
   
2. Scope of Work Conducted by the Audit Department
   Audit departments that engage in more nontraditional, strategic, and operational work may find it challenging to teach a rotational auditor how to effectively perform during a short tenure in the department. Audit departments with a consistent and standardised approach to auditing may have more success in quickly onboarding rotational staff and obtaining the expected quality of work.
   
   
3. Training and Development Infrastructure
   Rotational staff require intensive on-the-job and classroom training to make the rotation successful for both the staff member and the audit department. However, audit departments that aim to maximise the benefits of a rotational program invest heavily in the rotational employee’s development.
   
   
4. Company Culture
   Companies that emphasise the importance of the audit department and experience in risk and control concepts for managers and company leaders are more likely to embrace a rotational program. This type of environment will drive interest in program participation, as well as help with the smooth transition of rotational employees between various departments.
   
   

What is CEB Doing for ADR Members?

Setting up a rotation program: ADR has just published the results of research into the key factors to consider when establishing a rotational program. The second part will be published in the near future.

Rotation as part of talent management: The 2011 research and series of meetings identified effective talent management strategies for audit departments including rotation programs.


Most common challenges and recommended solutions: Many audit departments use rotation and guest auditor programs to help fill gaps in skill or business knowledge on the team. Leading audit departments use these programs not only to this end, but also to provide alternative training and career path opportunities for existing staff.

• Establish parameters of a rotation program | Read a recent CAE Discussion
• Recruit non-auditors into an interdepartmental guest auditor program | See how United Parcel Service did it
• Develop a leadership program combining management development, rotational assignments, and intense training | See how Home Depot did it
• Provide opportunities for current team members to “guest audit” new areas of the business | See how United Parcel Service did it