Tea Ladies: a major corporate risk

Internal Auditor, April, 2007 by Mike Summerell

"ONE OF YOUR TEA LADIES did not sign her performance appraisal form this year.... Please don't laugh, madam, this is a serious issue!"

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The comment above is an actual quote from an audit manager, and it's just one example of why many organizations view internal auditing simply as overhead--something that must be incurred but does not necessarily add value. I spent considerable time in operational management streamlining processes and eliminating anything that adds no value to the company or customers, and I believe audit professionals should do the same. Internal auditors need to focus their efforts on value-added activities and avoid spending time on pedantic, trivial issues that only serve to alienate or irritate their clients.

Traditional audit approaches frequently lead to predictable and only marginally useful results. For example, auditors often fill their reports with pedestrian observations such as "policies and procedures are not followed," "a lack of documentation exists," and "errors are not resolved timely." But, in my experience, managers typically seek more constructive, actionable information. They would like to know, for example, which business processes can be streamlined, or how to reduce costs, or how best to protect vital information assets. In other words, a discrepancy appears to exist between what management really wants and what auditors provide.

To better align auditing's services with the needs of management, auditors must be liberated from their traditional patterns of thinking. Audit managers who cling to regimented audit plans and programs limit the creativity essential to a vibrant audit function. Instead, practitioners must be free to experiment with new methodologies and approaches on every audit. In some cases, effecting change means challenging clients' expectations, because many of them likely believe that internal auditing is delivering exactly what it's supposed to. It also involves challenging the value of traditional professional standards and practices.

I struggle to name any realm of human activity where doing the "same old thing" is a recipe for innovation, evolution, or development. For many in the audit profession, deviation from established practice is automatically perceived as strongly negative. The tried-and-trusted approach represents a "safe" option, allowing auditors to cite compliance with standards and procedures as a justification for their lack of imagination or willingness to change. But is mechanical compliance with standards of practice necessarily a good thing? Do some established practices actually inhibit the development of our profession and merely serve as an excuse for mediocrity?

Auditors need to innovate, and they should increase their efforts to add value. Of course, providing assurance in traditional areas such as compliance and reporting constitutes a value-added service, and these should always remain key audit activities. However, it's important for auditors to also look beyond those areas. They should be free to experiment and realize that they can innovate without sacrificing independence and objectivity. Auditors just need to apply a bit of creative thinking, and place less emphasis on the tea lady's performance appraisal.

To comment on this article, e-mail the author at mike.summerell@theiia.org. The opinions expressed are solely those of the author.

MIKE SUMMERELL, CIA