Internal Audit – Can’t we do without?
Sorry, no way – in any financial organisation (regulated by EZB/BaFin) or Aktiengesellschaft. Internal Audit is a part of “sound management practices and procedures” (“ordnungsgemäße Geschäftsorganisation”) required by law.
If we have to have it…
… What is Internal Audit’s definition?
According to the IIA (Institute of Internal Auditors),
“Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.“
… What is Internal Audit’s mission?
The IIA’s latest mission statement reads as follows:
“The mission of Internal Audit is to enhance and protect organisational value by providing risk-based and objective assurance, advice and insight.”
Thus Internal Audit enhances the organisation’s resilience and probability to survive. This has hardly no more anything to do with making check marks.
If you are interested in how to enhance an organisation’s resilience and probability to survive, or to improve your skills to do so, we have set up a series of seminars for Internal Auditors.
If it provides risk-based and objective advice and insight – How could top-management profit of Internal Audit?
Imagine, you were a board member (Vorstand): wouldn’t you like to get risk-based and objective reports, advice and insight of your company?Imagine what you could do with this kind of information…
Why should additional Information be helpful?
Perhaps you are thinking: there is management reporting. Why should additional information be of any help?
Many organisations are prone to obsequious reporting.
This can be seen e.g. in project reporting using traffic lights, where the “watermelon-effect” surfaces: A project which is basically red according to people on low level changes it’s reported colour from yellow to green when rising from bottom to top through hierarchies to board level. The colour from the outside “green” is reported to the board, whereas the inside is a bright “red”.
Internal Audit provides a chance for the board to circumvent obsequious reporting – in writing as well as orally.
The board should be acquainted with alternative perceptions to act accordingly.
For what could Internal Audit be used?
Internal Audit can e.g.
• point out contradictions
• show aspects for which others are still “blind”
• something that has always been that way
• something that bears great chances or risks for the organisation
• make conflicts or interests or goals transparent
• show room for improvement on the organisational level
• enhance sustainable implementation of decisions
Internal Audit acts as sparring partner at eye level.