WORLD CLASS AUDIT ORGANIZATION SHIFTING THE AUDIT PARADIGM 1

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SHIFTING THE AUDIT PARADIGM

Auditors and Generals

The Two Biggest Lies

Being Part of the Solution

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AGENDA

The Three Pillars to Shifting the Audit Paradigm:Building a Balanced TeamKeeping Audit RelevantDeveloping Future Leaders

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PILLAR 1: BUILDING YOUR TEAM

Hiring is the most important thing an organization does

Build a Team – Not Individual Competitors

A strong team: tackles problems connects with people balances out individual team member’s strengths and

weaknesses.

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A strong team has diversity in its membership: Cultural Regional Industrial Personality – Myers-Briggs Type Indicator (MBTI)

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Myers-Briggs Type Indicator (MBTI) Introversion/Extraversion

Introverts get their energy from working independently are thought oriented

Extraverts get their energy from interacting with people are action oriented

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Myers-Briggs Type Indicator (MBTI) Sensory/INtuitive

Sensory people Prefer the tangible/concrete. They like and need details. They are project “completers.” They tend to stick with the “tried and true.”

INtuitive people Prefer the conceptual/abstract. They like the “big picture.” They are project “starters.” They like new ideas and concepts

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PILLAR 1: BUILDING YOUR TEAMMyers-Briggs Type Indicator (MBTI) Thinking/Feeling

Thinkers focus on facts and processes enjoy technical and scientific fields where logic is important. notice inconsistencies. look for logical explanations or solutions to most everything. believe telling the truth is more important than being tactful.

Feelers focus on the “people” aspects of problems/issues Are concerned with harmony and nervous when it is missing. look for what is important to others and express concern for

others. believe being tactful is more important than telling the “cold”

truth.

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Myers-Briggs Type Indicator (MBTI) Judging/Perceiving

Judgmental people Prefer structure and defer to “rules.” Are task oriented Plan work to avoid rushing just before a deadline

Perceptive people Prefer flexibility and can see rules as limiting or

arbitrary Like to approach work as play or mix work and play Are stimulated by an approaching deadline

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Auditors tend to be ISTJ’s Introverted (Table for one, please!) Sensory (Details, details, and more details!) Thinking (Just the Facts!) Judgmental (Follow the rules!)

Need to ensure there is balance on your team!

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Promotions and Rewards Criteria should be clear, consistent, and fair Understand the types of rewards that are meaningful to

your staff. Not everyone is motivated by the same thing

Celebrate accomplishments publicly

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Encourage Your Team to: Obtain Professional Certifications Network!! Get Involved with professional organizations

Rewards to the Organization A knowledgeable staff adds to an organization’s

credibility Gives your organization additional reach and resources

Leverage the knowledge and network that can be gained from involvement in professional organizations

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PILLAR 2: KEEPING AUDIT RELEVANT

Three Keys Ingredients: Relationships Value-Added Products Influence

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Relationship Building Include auditees in the audit planning process Communicate throughout the audit Solicit the auditee’s feedback

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Relationship Building Get to know the board and/or audit committee

Get out of the Office--Participate in organizational events

Don’t over-rely on email—Talk to people!

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PILLAR 2: KEEPING AUDIT RELEVANTRelationship Building Understand your audience (e.g. Auditee, Board,

Audit Committee) You will be able to better address their needs if

you understand THEM. They will be your ally if they understand (and

trust) YOU. Put things in risk terms that your audience

understands and values.

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Value-Added Products Avoid “Drive-By Auditing”

Damages credibility Resulting recommendations tend not to be

practical $Million recommendation to fix a $5 problem

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Value-Added Products Move away from a pure Compliance/Check list mentality Focus on Risks and Root Cause Ask the “Big Picture” question---does this make sense?

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Value-Added Products at the House - all while remaining independent!

Management Advisory Services Lean Six Sigma

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Independence Safeguards Structure that separates audits from advisories Follow GAO Yellow Book independence standards

Implement all three safeguards Considered during development of the Annual Plan Reconsidered when the Management Advisory

engagement plan is developed Management retains responsibility for selecting

alternatives and making decisions that impact their operations.

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PILLAR 2: KEEPING AUDIT RELEVANTManagement Advisory Services Provide consulting and analytical services to the Committee on House

Administration (CHA), House Leadership, House Officers, and joint entities (e.g. Architect of the Capitol, Library of Congress, etc.).

Services include: Risk Assessments

Assessing the risks of various House practices (e.g. Member data security)

Technology Analysis Assessing the risks of emerging technologies before adoption (e.g. cloud)

Process re-engineering support Identifying process bottlenecks and inefficiencies (e.g. voucher process)

Systems Development Evaluating controls upfront before systems and processes are deployed (e.g. Exchange, PeopleSoft)

Avoids costly retrofits and damage to organizational reputation.

Cost Benefit Analysis Arming management with data to make informed decisions (e.g. greening projects)

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Value-Added Products Lean Six Sigma---training the troops

Lean Management identifies process inefficiencies Six Sigma minimizes variation and improves quality National Association of State Boards of Accountancy

(NASBA) Accreditation Partner with the Dept. of the Army and the Office of

the Comptroller of the Currency (OCC) to train House Officers, House Committees, and Other Legislative Branch entities on Lean Six Sigma

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Expanding Audit’s Influence Building solid relationships and providing value-added

products Equals Influence…

Getting a seat at the table for the BIG decisions Have an Opinion! Timing is Everything!! Be Proactive!! Don’t over play your hand – be realistic with risks When you raise the alarm, they will listen

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WORLD CLASS AUDIT ORGANIZATION

Great Team – Check

Influential Audit Department – Check

All we need now is a Leader…

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PILLAR 3: GROWING LEADERS

Leaders Inspire people to achieve organizational excellence. Build and sustain trust both inside and outside the

organization. Should be held to a higher standard. Maintain the credibility of the organization and the trust

and confidence of its staff

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Equip your staff with the tools they need to succeed

Training Mentoring Praising publicly, counseling privately

When necessary, let people go if they can’t (or won’t) do their job

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PILLAR 3: GROWING LEADERSA Leader Should be Courageous Saying things that aren’t necessarily popular but need to be

said Dig in when you need to, but don’t view compromise as

weakness. Impacts staff morale and pride in the organization (for good

or for bad!)

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A Leader Should have Integrity Has the trust of followers Honest dealings Incorruptible values Ethical and stable Emotional Integrity

Predictable/Measured reactions Consistent and fair

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A Leader Should be Competent Ability to challenge, model, and encourage others Action / Outcomes Forward-thinking Proactive Encourages and values these traits in others

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A Leader Should Have Effective Communication Skills

Exercises prudence and discretion. Treats others with dignity. Provides clear guidance. Gives effective feedback. Is candid and truthful. Does not encourage or participate in office gossip.

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A Leader Should be Flexible Ability to multi-task and re-prioritize Easy to work with Willing to take on new responsibilities without clear

personal benefit. Views new responsibilities as an opportunity rather than a

burden. Open to new ideas, even if they do not conform to the

usual way of thinking.

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A Leader Should be Magnanimous Ensures team members are given credit for their

team success Takes personal responsibility for failures. Understands that leadership motivated by self

interest does not serve the well-being of the team.

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A Leader Should be Respectful Values and develops team members so that they

will grow professionally while also meeting current and future organizational goals.

Appreciates different team player styles and leverages their strengths for the better for the team.

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A Leader Should be Creative Challenges conventional wisdom and is not satisfied

with “that’s the way we have always done it” as an argument against improvement and organizational change.

Possesses a “can-do” attitude Invests energy in developing innovative solutions to

address problems

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A Leader Should be Enthusiastic Is excited and optimistic about the opportunity

each job presents. Views stressful events as an opportunity to

influence positive change rather than an obstacle which must be borne.

Uses levity and enthusiasm to energize and encourage staff.

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A Leader is Dedicated Committed to the success of the OIG mission, the

team’s goals, and all its team members. Spends the necessary time/energy to accomplish

projects within given time and resource constraints. Inspires dedication from their staff by example,

doing whatever it takes to complete the next step toward the OIG’s organizational vision.

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A Leader Should be Assertive Understands that assertiveness is not the same as

aggressiveness. Strikes a careful balance of being clear and direct

while also maintaining diplomacy and composure and respecting the dignity of others.

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Bottom Line: To be a good leader, you need to be someone people want to follow

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Closing Thoughts:

Gene Dodaro, Comptroller General of the US: “Accountability professionals need to step up. People are looking to us during these tough economic times.”(Speaking at the National Intergovernmental Audit Forum, Nov 2011)

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Closing Thoughts:

Rep Henry Cuellar (TX, District 28) “Auditees should not view audit reports as a “Gotcha!” but rather as a way to improve themselves.”(Speaking at the National Intergovernmental Audit Forum, Nov 2011)

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We need to be audit evangelists! Put out the good word that “We really are here to help!” Internal Auditors are perfectly positioned problem solvers

We have that rare organizational-wide view that can identify systemic issues

We understand our organization, its culture, and priorities We have the right skill sets---We’re analytical problem

solvers!

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We need to change the paradigm from

“Oh no, the auditors are coming”

to

“Call the auditors and find out what they think”

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Questions?????????

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CONTACT INFORMATION:

The Honorable Theresa Grafenstine CPA, CISA, CIA, CGEIT, CRISC, CGAP, CGMA

Inspector General

U.S. House of Representatives386 Ford House Office BuildingWashington, DC 20515202.226.1250

[email protected]

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mailto:[email protected]

Documents

WORLD CLASS AUDIT ORGANIZATION SHIFTING THE AUDIT PARADIGM 1