Millennium ready

Internal Auditor, Feb, 1999 by William E. Chadwick

6 JOINT CONTROL ASSESSMENTS Control self-assessments (CSA) have been instituted at various major corporate organizations during the past several years. While some internal auditors may believe self-assessment is not truly an audit role, I think it is fair to say that CSA is here to stay, and for good reason. Control self-assessments reduce audit time and facilitate quicker identification of important issues. In addition, CSA educates employees on business risks and internal controls; empowers employees and increases accountability; and provides employees with tools for assessing the control environment on their own between audits. Finally, the method conveys a sense of responsibility-sharing between internal auditing and operating personnel.

I think a more accurate term for the technique is "joint control assessment" because it emphasizes the sharing of responsibility between partners. The term self-assessment can be misconstrued as an attempt by internal audit organizations to shift some of their responsibilities to operating personnel. In addition, operating personnel may be intimidated by the term if they don't feel qualified to judge the adequacy of their internal control systems without professional guidance from internal auditing. Johnson & Johnson has been one of the forerunners in adopting the joint control assessment terminology to describe this new partnering effort.

Joint control assessments can be performed in many different ways, such as by manually or electronically distributing questionnaires to operating personnel or by conducting workshops. At Boston College, we plan to institute both approaches as pilot programs this year. However, joint assessment reviews will not replace our traditional audits, but will be conducted on a rotational basis with more traditional types of reviews.

7 COST SAVINGS AND REVENUE IMPROVEMENT GOALS One significant way internal audit can add value to an organization in a quantifiable manner is to identify ways to reduce costs or increase revenues: The first step in accomplishing this effort is to establish an annual, specific financial savings goal for the internal auditing department. Related recommendations documented in audit reports should quantify the specific cost saving or revenue improvements identified during the year. Quarterly measurements of actual savings versus the annual goal should be measured and discussed at departmental meetings. This effort should also be incorporated into presentations to the audit committee.

As an incentive, bonuses should be strongly considered for internal audit staff who contribute most significantly to reaching the annual cost savings goal. As a result, when management asks what value internal audit adds to the organization, specific dollar savings can be presented.

8 WEB-BASED AUDIT ACTIVITIES Web technology can be harnessed to accomplish audit tasks previously performed manually. For example, many internal audit organizations perform an annual conflict of interest survey Letters are manually prepared requesting various members of the organization to read the conflict of interest policy and indicate whether or not they perceive a potential conflict.