Dear fellow auditors your interventions should not benefit you; they should benefit your clients!
Easier said than understood, I’ve come across many auditors both novices and the experienced, who while selling a recommendation, base their arguments on for instance; that data should be procured in a particular format because that’s how I can use it! And that’s just an example; auditors even tend to sell internal control improvements based on how that could make their work easy.
And that’s a nonstarter when it comes to selling your improvement advisory. The client and its internal control systems are not designed to facilitate auditors; they’re designed to facilitate them. And the internal auditors’ improvement-oriented interventions need to be focused to that end; how the benefits of client’s investment in its own internal controls system could be optimized.
The benefits that we, the auditors get from such interventions is a by-product not the main product!
But why the auditors find this hard to understand? Why they end up making recommendations that are geared to make their lives easier, rather than their clients? There could be many reasons for that. For instance:
- They benchmark against other client systems they have experienced.
- They tend to equate it with theory.
- They think their work will become easier if the client makes changes.
And
- They must identify something to change!
The last one is my favorite; the auditor’s brain is hard wired to find issues, it seems. Contentment stems from contributing something even if it’s not of value. So, when a good reason to sell a recommendation is not found, it is tried to be sold for audit’s sake; for instance, future audits would require less efforts if changes were made.
But the first two are also not without controversy.
Benchmarking against other clients; even if accurate and adequate for the client under review, would mean that the auditor has settled for copying a solution that worked elsewhere and not stretching the audit imagination and competence. Resultantly a competitive edge or a uniquely suited to the client’s needs solution is lost.
And theory? Well, efforts should always be made to relate theory with practice but what’s good on theory might not be practically relevant or simply not workable, owing to the client’s specific conditions or factors. So, there can’t be a standard approach.
All these reasons manifest into saying, I am selling not because you need it but because I need to sell it. And how do you expect a buyer respond to such a promotion? Not just walking away but never returning too! The outcome: audit loses on its value addition premise and client makes a perception of the quality of audit interventions.
But it takes two to tango; auditors are not alone who bring about this predicament upon themselves. Many times, clients contribute to it as well. Specifically, the clients who don’t understand the purpose of audit interventions, believe what they are doing and how they are doing is as perfect as possible or are always on the lookout for reasons to be dismissive of audit.
I remember having encountered an argument for why the Company should consider investment in ERP. It was stated by a procurement manager that to fulfill auditor’s reporting/information wish list it is best the Company invested in ERP, otherwise the Company was doing just fine without it.
No wonder then, that even in the 21st Century, the Company continued operating applications in silos that were dependent on human interventions, not just for data entry but for ensuring its processing controls and reporting was accurate!
And no wonder then, that the department of the one who made this argument was one of the leading ones within that entity that had higher scores on both the audit findings and the recurrent findings indices. The auditors were always confronted with, “we have been doing this through ages, without a problem” and the findings were responded to by symptomatic treatments.
So, how should we sell the findings? Let’s have a look at some examples:
- The data if queried in ‘x’ format will help identify key trends and patterns easier and all ‘ABC’ fields in it will ensure that time taken in procuring all relevant data is consumed in making invaluable decisions on it.
- A procedure needs to be written so that workflow is known, control responsibilities are delineated, timelines are adhered to, accountability is established, output is determined, and approach is standardized.
- An ‘x’ change in strategy will result in costs optimization to the tune of ‘$$$’ and the resultant impact in EPS will be ‘$$’.
- A control is imperative so that the known risks ‘XYZ’ could be mitigated against leading to fulfillment of objectives.
- ERP investment is required to integrate the process flows, reduce time consumed in correcting data fallacies, avoid reliance on human interventions, providing one stop shop solution for all data needs, operational costs optimization, improved planning and enhanced customer service.
All these arguments are based on benefits to the client; nothing for the sake of audits or auditors. Auditors will reap the byproduct benefits.
Care to know what happened to the one making the ERP for auditors’ argument?
The management still cannot find out the total value and volume of the Company’s purchases and the total number of valid commitments it has in a point in time! And the auditors continue having a jolly good time with repackaged findings.