Primary navigation:

QFINANCE Quick Links
QFINANCE Topics
QFINANCE Reference
Add the QFINANCE search widget to your website

Home > Auditing Best Practice > Starting a Successful Internal Audit Function to Meet Present and Future Demands

Auditing Best Practice

Starting a Successful Internal Audit Function to Meet Present and Future Demands

by Jeffrey Ridley

Executive Summary

  • Starting an internal audit function requires a clear and inspiring vision to provide the right direction for its success.

  • The services provided by the internal audit role must add value and meet the needs of all its customers, at every level in the organization. This demands a wealth of knowledge and experience of risk management, control, and governance processes in the function.

  • The internal audit charter approved at board level must state the professional standards expected from all staff in the function.

  • Internal auditors in the function should be trained to ask the right questions and advise on the impact of present and future change at all levels in the organization, from strategic to operational.

  • Quality of performance in the function and its continuous improvement requires a total commitment, measured and reported at board level through key performance indicators, and feedback from its customers.

  • The function should contribute to implementation of quality policies in the organization it serves by using its own experience of achieving performance quality.

Introduction

In 1998 on the occasion of the fifty-year celebration of the establishment of the Institute of Internal Auditors (IIA)’s five chapters in the United Kingdom, I wrote:1

“We need to be seen as innovators in the world of regulation, control and auditing. Creativity, innovation and experimentation are now key to our professional success. They must be the vision of all internal auditing functions. This means improving old and developing new products and services for delighted customers, with a focus on their objectives. This means being at the leading edge in all the markets in which we sell our internal auditing services. This means beating our competitors and knowing who these are. This means having the imagination, and foresight into what our organizations will require from us, not just in the year 2000, but also in 2005 and beyond.

In this 50th year celebration of our national institute’s past and present teamwork, all IIA-UK [and Ireland] members should continue to set their sights on being inventors of an improved and new internal auditing, to delight all their customers … and increase its status as an international profession.”

Establishing a successful internal audit function requires more than just support and resources approved at board and senior management levels; or an external requirement by government and regulators; or encouragement by external auditors. These are all important drivers and influences for creating the function and setting the boundaries in which it will operate and provide services. But the present and future demands of a successful function require a clear and inspiring vision for the direction of its services, which can only be provided by those who work in the function. It demands their knowledge and experience of risk management, control, and governance processes; their professionalism; their imagination, innovation, and creativity to manage change in what is and will be required from their services. All these attributes are needed if these service providers are to delight all their customers by the quality of their performance. They are needed whether internal auditing is resourced by staff in-house, outsourced, or co-sourced.

Clear and Inspiring Vision

A vision statement is key to the mission of any organization or function. In 1991 Richard Whitely wrote some inspirational words on vision statements:2

  • A good vision leads to competitive advantage.

  • One way to define vision is … a vivid picture of an ambitious, desirable state that is connected to the customer and better in some important way than the current state.

  • How does this vision represent the interests of our customers and values that are important to us?

  • A vision has two vital functions, and they’re more important today than ever before. One is to serve as a source of inspiration. The other is to guide decision making, aligning all the organization’s parts so that they work together.

  • If your vision is not an impetus to excellence, then it has failed.

  • When a company clearly declares what it stands for and its people share this vision, a powerful network is created—people seeking related goals.

  • Constantly communicate your vision for your organization to those who work with you and for you. Don’t let a day go by without talking about it.

This advice has not dated. It can be seen in many vision statements used by organizations today and will be tomorrow. An inspirational vision for internal auditing in an organization can have a significant impact on those who provide and receive the service. It should be aligned with its organization’s vision, creating direction for all its resources, promotion, planning, engagements, and reporting. From the vision should flow the strategic mission of the internal audit role and its business plan, which will set the scene for the resources needed for its achievement. Following the creation of an internal auditing vision statement, all internal auditing staff and senior management should be involved in its development. Seek total organization commitment and board approval for its direction. That direction will set the scene for the services it will provide.

Back to Table of contents

Further reading

Websites:

Back to top

Share this page

  • Facebook
  • Twitter
  • LinkedIn
  • Bookmark and Share