Breaking the Chains: Rethinking Internal Audit Rituals
An unconventional approach to unleash efficiency and drive results
In the internal audit profession, we often find ourselves entangled in a web of formalities and rituals. However, a recent experience has shed light on the potential drawbacks of such processes. This article explores the significance of being results-oriented in internal audit, drawing parallels to the saying, "Don't tell me how the clock is made, tell me what time it is." I reflect on a project that defied traditional norms, highlighting the value of focusing on outcomes rather than on rigid procedures.
The Vanishing Rituals:
During a recent advisory project, our team used an unconventional approach:
- Zero workpapers created
- Zero status reports
- No entrance or exit meeting
- No final report
It all happened via phone and email. The project lasted about 40 hours and at the end of it, we identified two actionable items that are estimated to save a considerable amount of money to our organization.
This unusual method proved to be highly effective and productive, leading me to question the necessity of these traditional practices.
The Pitfall of Empty Rituals:
As Larry Bossidy and Ram Charan pointed out in their book Execution, The Discipline of Getting Things Done, certain processes can become empty rituals, almost distractions. People can do a lot of work but very little of it is useful. This observation is highly relevant to the internal audit profession. There is a tendency for auditors to get caught up in the rituals of the audit process, like creating extensive workpapers and status reports, or conducting formal entrance and exit meetings. These rituals, while they may have originated from a place of necessity, can sometimes evolve into mere formalities that consume time and resources but don’t contribute meaningfully to the end goal. It's essential for auditors to regularly challenge the traditional rituals, understanding which elements are adding value and which have become mere formalities.
Outcome-Oriented Approach:
Instead of fixating on procedural elements, this project concentrated on identifying actionable items that had the potential to generate substantial cost savings for the company. The absence of excessive documentation and meetings allowed us to allocate more time towards analysis, and problem-solving. In this specific project, we engaged in a form of scenario-based testing, using a transaction in which we were the customers to validate back-end data.
Efficiency in Communication:
The reliance on phone and email communication proved to be surprisingly efficient. By eliminating the need for elaborate meetings, you know those meetings with PowerPoint presentations that take a week to create, we expedited the project timeline.
Changing the paradigm:
It is time to reevaluate our practices and adopt a mindset that aligns with the saying, "Don't tell me how the clock is made, tell me what time it is."
While some internal audit rituals serve legitimate purposes, it is essential to periodically reassess their relevance and adaptability. What other rituals can we do away with would you add to the list?