Training new Auditors: the demands of modern auditing have raised the performance bar for new practitioners. A comprehensive, multi-tiered training framework can help bring both rotational and professional auditors up to speed

Internal Auditor, April, 2004 by Dennis Applegate

WELL-PUBLICIZED CONTROL FAILURES, PERHAPS BEST EXEMPLIFIED BY WorldCom and Enron, have driven many U.S. public companies to take unprecedented steps to bolster corporate governance and better manage risk. Legislation such as the U.S. Sarbanes-Oxley Act of 2002, which mandates attestation of controls over financial reporting, has reinforced the need for effective governance and increases the need to manage risk effectively. On the heels of these developments, demand for internal audit services has risen dramatically, and new authoritative guidance from organizations such as The Institute of Internal Auditors (IIA) and The Committee of Sponsoring Organizations of the Treadway Commission (COSO) are shaping a new paradigm for the profession and raising the bar for audit performance. Today's internal auditors need to be well-versed in risk management and control and capable of helping their clients meet complex business challenges.

The changing corporate landscape and increased demands of audit work place a new emphasis on internal auditor training. In many organizations, audit committee and board members face personal liability for any lack of due diligence, and governance failures place companies at significant risk for lost customers and investors, as well as reputation damage. Corporate leaders depend on internal auditors to be highly trained in the disciplines of their profession and equipped with deliberate tools to evaluate and improve corporate governance.

To meet the demands of 21st-century auditing, the profession needs an effective training strategy aimed at keeping pace with the variety of new initiatives for corporate governance, control, and risk management. Using a new auditor training model that can be adapted to any corporate business environment, audit leaders can maximize staff competency and knowledge, consistent with the new internal audit paradigm.

AN INTEGRATED APPROACH

Training internal auditors can prove immensely challenging. Audit work requires a breadth of knowledge and range of technical skills that can take extensive time and effort to develop. Because internal auditors need to be familiar with all aspects of the business environment, the scope of learning for staff members who aspire to a career in the profession can be daunting.

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The audit-specific challenges related to training are often further complicated by corporate employee-rotation practices. In recent years, many large corporations have leveraged the unique function of internal auditing into developmental opportunities for employees with executive potential. Such programs expose employees with promising leadership capabilities to a variety of operations and functions routinely examined by professional auditors, providing them with the opportunity to observe and interact with executive management. Most programs are limited to terms of one to three years. Although the developmental concept is sound given the corporate visibility of internal auditing, rotational programs can strain the quality of internal audit oversight. New rotational auditors are often unfamiliar with basic audit techniques and must be taught the requisite skills in a structured and systematic manner to sustain audit quality. In many companies, the number of rotational auditors approaches that of the professional staff, increasing the need for effective training.

Training efforts geared toward new staff members, therefore, must address the broad business knowledge and specialized technical skills required of both professional and rotational internal auditors. "Internal Audit Training Framework" (page 69) presents a criteria-based model for developing a comprehensive training program for all new auditors. The model addresses not just required internal audit skills, but also auditor career goals and performance objectives. The IIA's International Standards for the Professional Practice of Internal Auditing (Standards) provides the basis for the training curriculum, focusing on planning and performing the audit and communicating and monitoring results.

OBJECTIVE-BASED TRAINING

The chart on page 70 presents a suggested two-year training progression and curriculum for new auditors. The featured courses address knowledge and skills that satisfy internal auditor proficiencies implicit in The IIA's Standards and are commonly accepted in the industry. Each internal audit department should assess the proposed training curriculum and progression and adjust the focus, timing, or duration of each training module based on its specific objectives and desired audit behaviors. Some organizations may need to tailor the learning schedule to their respective audit processes and internal audit charter. Adjustments to the training progression also may be required to emphasize one module over another in light of a particular audit philosophy or business risk, or to reinforce auditor behaviors that support business requirements and company objectives. The knowledge and skill attributes inherent in the training modules, however, should remain essentially unchanged.