Richard Chambers on Internal Audit Driving Transformational Change

In this edition of AuditTalk, Richard Chambers, Senior Internal Audit Advisor at AuditBoard and former CEO and President of The Institute of Internal Auditors, delves into what’s needed for internal audit to drive transformational change in the function and in their organizations. He digs into key lessons from his new book, Agents of Change: Internal Auditors in an Era of Disruption, including:

• Should internal auditors be agents of change? Over 600 CAEs share their views on internal auditors taking on a role to catalyze transformation. 
• How is internal audit’s role evolving? Hear how internal audit is changing its focus from looking in the rearview mirror to scanning the horizon.
• What is technology’s role in enabling transformational change in internal audit? Why relying on antiquated processes and technology will not enable internal audit to deliver the value needed in the current era of disruption. 
• What attributes do internal auditors need to be powerful agents of change? From business acumen to strong relationship building, these are the key attributes internal audit needs in the 21st century.

Watch the full AuditTalk video, and read the can’t-miss highlights below.

Should Internal Auditors Be Agents of Change? 

“My definition of an agent of change in the internal audit world is that these are internal auditors who are catalysts for transformation that not only protects but creates value. We’ve long talked about internal auditors as value protectors, but we’re now talking much more about internal audit’s role in creating value.”

“We polled chief audit executives around the world — more than 600 chief audit executives responded to our survey. 

• 90% of CAEs who responded said, yes, it’s appropriate for internal auditors to function as agents of change within the definitions that we outlined. 
• 80% said yes, they get the sense that management would be supportive of internal auditors being agents of change. 
• 80% said, yes, boards would see it as an appropriate role for internal auditors to be agents of change.”

“Then comes the reality check. We asked, ‘do you think internal audit is viewed as an agent of change within your organization?’ Only about 50% said, yes, we’re seen as change agents in our company. Almost a quarter said, no, we’re not seen as change agents in our organizations. You can see that there is a bit of a gap between what chief audit executives think our role should be and how they see internal audit being viewed within the organization.“

How is internal audit evolving its focus from hindsight to insight to foresight?

“I have seen an enormous amount of change just in the time that I’ve been a part of this profession. In the early years that I was in the internal audit profession, the imperative that internal auditors pursued is what I’ve referred to as hindsight. We were very much focused on what happened in the past — what happened last year, last week, last month, were the controls designed and implemented effectively, was there accountability? It was always about looking in the rear view mirror.”

“Throughout the latter half of the 20th century, internal auditors began to focus not just on hindsight, but giving a more contemporary perspective — not just looking at what happened, but looking at what is happening. That’s what we start to talk about internal auditors providing insight. Continuing to look behind us, but also looking around us to provide perspectives, assurance and advice while it’s still timely enough to make a difference.”

“I think our profession has an ultimate destiny to also provide foresight, to be able to look forward as well as around us and behind. And yet, I think in some ways our outdated processes, the way we do work ourselves, the way we undertake our own responsibilities really impair our responsiveness, our ability to provide not only foresight, but in some instances insight.”

What is technology’s role in enabling transformational change in internal audit?

“If we’re going to be change agents, we have to start by changing our own approaches and really looking hard at how we carry out our responsibilities as internal auditors. If we’re trying to present ourselves as change agents in our organizations, and yet we’re still using antiquated processes, and we don’t have the kind of technology that, say, AuditBoard has made available to us — if we’re not doing those things, we’re going to have a very difficult time in delivering results that are impactful and timely. “

“Are we using processes that are designed to generate results quickly? I’ve noted over the last few years our ability to audit at the speed of risk — sadly, a lot of our processes have us auditing at the speed of glaciers. If we’re not able to get someone a report or results within a matter of days or weeks, are they really going to find that information to be as powerful or relevant as if we could get it to them much faster?”

What attributes are needed to be powerful agents of change in the internal audit function in the 21st century? 

“The skill sets that we bring to our roles as internal auditors, if we are still bringing skills to our roles that were important 20 years ago, but we’re not making the investments to update and refine the skills that we bring, we’re not going to be seen as real change agents.”

“Effective change agents have what I would call a good general business acumen — an understanding of good, sound business principles. I spent 26 years in government, and every day that I was an internal audit in government I was learning about good, solid business principles, sound stewardship, and strong, effective controls. It’s all the same, regardless of whether you have a profit motive or not.”

“Strategy starts at home. If you don’t have a , if the internal audit department itself doesn’t have a strategic plan, in all likelihood, you’ve got some work to do in proving that you’ve got the strategic mindset. Strategic internal auditors bring a vision to the work that they do. They’re not just looking at the horizon, they’re looking beyond. If the most extensive plan that you ever generate is your one-year audit plan, you’re probably not bringing enough vision to the role.”

“The most effective change agents also have the ability to build and sustain relationships. If you’re being asked to make changes, you’re going to need to trust the person or people who are pushing you to change. Openness to change is rooted in trust.”

“Some trusted advisors are very content to just give you advice, and they’re not really that invested about whether that advice transcends or transforms into real value for the organization. I believe we all have an opportunity to do more than just being trusted advisors. I think we can be agents of change in our organization.”

“We must be powerful voices for change in our organizations. We can’t sit back and wait on others to ask us for advice. We have to get out there in front of issues and challenges. We have to see further out in terms of risks. We need to recognize that we’re surrounded by talented change agents in our profession. I want every one of you to go forth from today and be agents of change in your organization.”

Stay tuned for more AuditTalk video interviews with audit community leaders about industry issues, insights, and experiences!