What does it take for a business to thrive? Well, if thriving is what the business intends to! And it doesn’t matter what thriving means to it; could be anything depending on its purpose. No, if you thought I was to write internal audit, it being my passion, you were wrong. Internal Audit exists when a purpose to the entity exists!
So, it’s purpose that a business needs to thrive. It could be anything from as basic as an increase in shareholder’s wealth, to being a pioneer in the industry / industries the entity operates in or to exist for the societal welfare. What matters is that the purpose needs to be translated to specific goals and objectives, for a purpose that can’t be translated is, well, not a purpose.
Be it a dream to begin with, to an ideation, a vision, and then a mission, a purpose comes into existence. For this purpose, to fulfill the dream it’s based on, it needs to be deciphered into plannable, communicable and actionable objectives.
Thus, every entity decodes its purpose into objectives it could strive for. It doesn’t matter how narrowly focused or how farfetched these are, objectives are what the efforts are directed towards and thus justify its existence. These are allocated to its people with responsibilities towards their fulfillment.
But these responsibilities require accountability. Forget about objectives and the domineering purpose if no accountability mechanism is put in place. And talking of responsibilities and accountability models, the best that comes to mind is undoubtedly The Institute of Internal Auditors “Three Lines Model”, whereby management with all responsibilities and internal audit with its independent and objective reviewer role are accountable to the Board which in turn is accountable to the shareholders.
A purpose need not be written off if its underlying objectives are assigned with responsibility and accountability. Let’s have a look at the various purposes’ businesses have and how entities can ensure these materialize!
|
Purpose |
Existing because |
Objectives |
Regular Path to Success |
|
For Profit |
Products & / or Services, for profit entities are aimed at maximizing shareholder wealth |
Objectives aimed at being sustainable, ahead of competition, growth, diversification, agility and adaptability, process optimization, etc. |
Well laid out management structure & systems, policies and procedures, performance objectives & targets Full Board (Assurance & Advisory) Internal Audit |
|
Missionary |
Not For Profit primarily, existing to serve a greater cause in society |
Objectives aimed at sustaining, enhancing provision of welfare, social outreach, alleviating suffering in target societal segment |
Non-bureaucratic structure & systems to enable fluid support and decision making. Policies, Procedures & Objectives alignment with donor conditions and societal needs. Full Board (Assurance & Advisory) Internal Audit |
|
Statutory & Regulatory |
Governmental or through statute, existing to serve public interest |
Objectives aimed at sustaining, serving the public interest, reputation, independence & objectivity, overall sectoral evolution and improvement |
Well laid out management structure & systems, policies and procedures, performance objectives & targets. Alignment with legal and upholding public confidence requirements. Full Board (Assurance & Advisory) Internal Audit |
|
Project Based |
Any arrangement existing to hammer out a project from planning to completion |
Objectives aimed at sustaining, project delivery timelines and work specifications |
Lean structure and systems, minimalist policies and procedures covering most significant risks. Majorly Assurance based Internal Audit with minimal specific Advisory |
Surprisingly, there’s yet another type of purpose left not listed above. I call it the “Wilting Away” purpose. Fact of the matter is that this purpose is not created, it forms overtime when the main purpose fades away and the entity loses its focus. This is especially true of entities that lack a culture of accountability at their core for when accountability is not in place, there’s no intent and no effort to stay afloat, sustain and grow.
Who’s there to ensure the management’s focus remains on objectives and entity’s overarching purpose? Board, of course! But how Board satisfies itself that the entity’s affairs are being managed as intended or even better? Certainly, through professional and independent Assurance (for intended performance) and Advisory (for improved performance). Where do we find that? In a definition that covers it immaculately, Internal Audit. Here it is!
However, rather than taking the regular approach to purpose fulfillment, how about an approach that could ensure the entity never loses focus and in fact is always on the lookout for enriching its purpose? Indeed, such an approach is possible. It would mean to integrate the purpose philosophy in its decisions and operations, systems and processes, policies and procedures, objectives and targets and certainly its governance, risk management and control (GRC) systems.
Yes, such integration is possible, its key ingredient being the assignment of the correct role to the internal audit function. That correct role is that of the adviser at the executives table amongst the C-Suite. Through the improvement-oriented interventions in the GRC, this adviser can help you build the framework for decoding the purpose into objectives and aligning the systems, processes, policies, procedures and performance targets. Also, because objectives for having an internal audit are required to be aligned with the entity’s objectives for internal audit to help the business thrive in its objectives.
Indeed, this evolution is cyclical; no purpose can do without the Internal Audit’s advising prowess in helping sustain itself and assisting with a foundation on which to grow and as it progresses step by step, objectives for internal audit investment continue to evolve.
Thus, don’t write off your purpose just yet! Consider writing if off when you’ve already written off Internal Audit into oblivion first!