â€¢ The business world is constantly changing. Internal auditors increasingly need to embrace ongoing changes to the business. They also need to understand changes to key drivers, such as the regulatory environment, the profession, and the social and political landscape.
â€¢ To do so, internal auditors must maintain a meaningful dialog with senior management, so as to understand their changing needs and expectations.
â€¢ An internal audit work plan that aligns neatly with the primary risk concerns of senior management and other key stakeholders ensures that the audit effort is directed at the areas that are likely to add the greatest value to the organization.
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Internal audit staff are being increasingly relied on to provide organizational expertise in risk management, internal control, and governance processes as a consequence of the emergence of stronger corporate governance demands across the world. Internal auditors need to have strategies in place that allow them to remain abreast of trends and emerging issues within their organization and the broader business community.
Contemporary internal auditing practitioners need to apply a strategic approach to understanding the key organizational value drivers and positioning themselves to meet the expectations of senior management.
Internal auditors are well placed to influence senior management in setting the right tone at the top. This, in turn, is a powerful way to nurture an organizational culture that is consistent with the values, risk tolerance, and strategies of senior management and the board.
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What Senior Management Wants
â€œThe Chief Audit Executive should effectively manage the internal audit activity to ensure it adds value to the organization.â€3
Senior management trusts internal auditors to â€œtell it as it isâ€ by reporting without fear or favor. One company chairman4 observed that â€œsenior management want much more immediate and informal input on how the corporation is doing â€¦ Iâ€™d rather have the internal auditor on my doorstep telling me what I need to know so I can act on it now.â€ His main suggestions for internal auditors were:
â€¢ Donâ€™t be distracted from good business practice.
â€¢ Understand your customer.
â€¢ Avoid being too production-oriented.
â€¢ Prioritize your activities and coordination role.
â€¢ Speak up when others may not.
Senior management is looking for assurance that current business activities meet regulatory and legislative obligations. They are also looking for ideas that drive better business performance in line with their overarching strategies and business model.
Internal auditors are best placed to meet senior managementâ€™s expectations when they apply a sense of urgency to their work, apply a winâ€“win mindset, and consistently deliver on commitments made. It is imperative that the integrity and credibility of their activities is undoubted, and that they nurture a professional and constructive relationship. The chief audit executive should undertake surveys of senior management to measure the quality of the service and determine how well the internal audit activity is serving their needs.
See below for a perspective on senior managementâ€™s priorities in one organization in relation to internal auditing.
The chief audit executive ought to maintain regular conversations with senior management with the objective of understanding their business perspectives and expectations of the internal audit activity. This helps to shape the planning, objectives, and scope of individual audits. The relationship should be based on cooperation, collaboration, and mutual respect.