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ALIGNING INTERNAL AUDIT
WITH
MANAGEMENT AND THE BOARD
ASSURING YOUR WORK IS MEETING YOUR
STAKEHOLDER’S EXPECTATIONS IS VITAL TO
SUCCESS IN OUR PROFESSION
Charlie Johnson, CIA, QIAL, CGAP, CFSA
LCRA General Auditor
Our mission
To enhance the quality of life of the
Texans we serve through water
stewardship, energy and community
service.
What is LCRA?
Colorado River
• Largest river within Texas
• Almost 900 miles long
• LCRA manages lower two-thirds
The Highland Lakes
Floods and droughts
Our history
• History of floods led to construction of dams
• LCRA formed in 1934 to take over work on unfinished dams
• Lyndon B. Johnson worked to expand LCRA’s role – to bring power to rural Central Texas
LCRA lights up
Central Texas
Wholesale Power
• Coal, gas, wind and hydroelectric power
• LCRA operates five power plants and six hydroelectric dams
• About 3,670 megawatts
• Enough electricity for about 1 million people
LCRA Transmission
Services Corporation
• About 5,200 miles of
transmission lines
• Nearly 400
substations
Parks and
community services
• About 13,300 acres
• More than 40 parks,
recreation areas, natural
resource areas and river
access sites
• Community Development
Partnership Program –
awarded more than
$42 million in matching
grants
LCRA Auditing Services Team
13
LCRA Auditing Services
Vision: Auditing Services is an integral,
trusted advisor helping LCRA succeed.
Mission: Auditing Services provides
objective assurance to LCRA on
governance, risk and control practices
critical to the organization’s future success.
14
And now a word from our sponsors…
• Free lunch…. and an adult beverage
• Earn CPEs and enhance your professional
knowledge
• Network with peers…. and have a little
fun!
• Help keep our Austin IIA Chapter Platinum
** Must be a Certified Internal Auditor**
15
Examples of Stakeholders
16
Are These Stakeholders?
17
Lost Boys, 1987
18
2016 LCRA Board of Directors
19
2006 LCRA Board of Directors
20
LCRA Executive Team
21
Internal Audit Stakeholder Expectations
2011 CBOK
Stakeholder Value Expectations
Board Assurance and no surprises / eyes and ears
Executive Assurance, value for money / management tool
Line Management Help, controls assurance, recommendations /
management control
Internal Audit Staff Career, development, exposure, making a difference,
WIFM
External Audit Combined assurance, information sharing / substantive
testing
Regulators Objective opinion, peace of mind / investigations
Community Social responsibility, protecting the economy
Shareholders Value protection, whistleblowers
22
“Voice of the Customer”
Stakeholders’ Messages
for Internal Audit – CBOK 2016
1. Know the business of the organization.
2. Assurance is assumed.
3. Best practices when providing assurance.
4. Building on assurance.
5. Coordinate with the second line of
defense.
6. Effective IA structure and relationships.
23
Charlie Johnson’s
Stakeholder Recipe
• Six month audit plans:
– Informed from regular conversations and input
from executives (and approved and discussed 2x
annually with the audit committee)
– Primarily oriented to the organization’s strategies
and mitigations on the key risk register
– Keep audit universe, COSO and other audit
jargon/concepts to ourselves (but don’t ignore
them).
24
Charlie Johnson’s
Stakeholder Recipe
• Show/practice your commitment to the
organization:
– Use the same risk language/framework adopted
by management
– Increase non-audit employee interactions
– Show up and participate as employees and
managers at all organization meetings/functions
– Recognize that not every solution is an audit.
25
Charlie Johnson’s
Stakeholder Recipe
• Keep Board’s view of organization front and
center:
– Attend/monitor all board and committee meetings.
– Commit to regular 1-1 visits with directors
• Create informal opportunities to visit and learn
– Read what they are reading
• Newsclips, board books, professional journals
26
Charlie’s Personal Pillars
Understand your strengths, weaknesses,
values and worldviews
• Habit of continuous self-reflection and
learning.
• Be aware of unhealthy blind spots or
weaknesses.
27
Charlie’s Personal Pillars
Engage others with a positive, caring
attitude
• Create environments bound and energized
by loyalty, affection and mutual support.
• Commit to honoring and unlocking each
person’s endowments and potential.
28
Charlie’s Personal Pillars
Energize self and others through bold
ambitions
• Imagine an inspiring future and strive to
shape it rather than passively watching.
• Extract gold from the opportunities at hand
rather than waiting for golden opportunities
to be handed to you.
29
Charlie’s Personal Pillars
Confidently innovate and adapt to
embrace a changing world
• Anchored by nonnegotiable principles and
values
• Indifference that allows exploration of new
ideas and approaches
30
10 Core Principles (anchors)
1. Demonstrate integrity
– Embody your personal beliefs system at work
2. Demonstrates competence and due professional care.
3. Is objective and free from undue influence.
– Recognize that our objectivity is the heart of our value proposition
– Have a life and friends outside of work
4. Aligns with the strategies, objectives, and risks of the
organization.
5. Is appropriately positioned and adequately resourced.
– Advocate for change if needed and/or work elsewhere
31
10 Core Principles (anchors)
6. Demonstrates quality and continuous improvement.
• I am never done learning how to be a better auditor
7. Communicates effectively• Use the organization’s risk and control language
8. Provides risk-based assurance.
• Starting from a controls perspective is dead
9. Is insightful, proactive and future-focused.
10. Promotes organizational improvement.
• Put the success of the organization first
32
Thank You!
Ask Me Anything!
Charlie Johnson
charlie.johnson@lcra.org
512.730.6878
Interested in Austin Test Development Team?:
Nicole Rhyne
nicole.rhyne@lcra.org
512.578.2703
33
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