Consultant charting course: Working together, internal auditors and their clients can navigate any obstacle to reach common business objectives

Internal Auditor, Dec, 2001 by Dave Richards

FOR SOME INTERNAL AUDITORS, THE concepts of consulting and auditing are at odds with one another, because they see consulting as putting the auditor too close to the customer and potentially compromising the auditor's independence. Actually, consulting has been part of internal auditing for years, but it is just beginning to be considered a real service. The new definition of internal auditing recognizes that the focus of internal auditing should include both assurance and consulting services. It is clear that internal auditors can add value to consulting assignments by providing the methodologies, facilitation, focus, knowledge, technology, best practices, and independence that help solve customers' problems.

Consulting tends to create a new role for auditors with their customers. Internal audit clients expect a full line of services that will help them meet their business objectives. Consulting services are one way of helping them succeed.

PROVIDING VALUE

Internal audit customers require consulting assistance in three basic areas: 1) developing processes to accommodate new technologies such as e-business; 2) revamping existing processes to make them more efficient; and 3) solving organizational, process, procedure, and relationship problems.

In the final analysis, providing consulting services is yet another way internal auditing can provide value in the areas of:

* Offsetting costs that would otherwise be expended to obtain the service from outside firms at much higher costs.

* Continuity of relationship in that internal auditors are part of the company and always will be available to ensure customer satisfaction.

* Total service to the customer, because internal auditors can provide upfront, during, post, and follow-up participation in a consulting project -- no matter how long it takes.

* Company knowledge and experience, which can be called upon for information and to identify relationships and impacts of processes across the organization.

* Project management, facilitation, process analysis, financial costing methods, alternative evaluation techniques, and oral and written communication.

Additionally, as members of organizations such as The IIA, the Information Systems Audit and Control Association, the Association of College and University Auditors, and various other industry audit groups, internal auditors can provide a network of relationships in similar and varied businesses when comparisons, benchmarking, and alternatives are needed.

FOCUS ON PROCESS

Most consulting assignments focus on specific, customer-directed issues. The customer and the internal auditor agree on the scope of the project and the nature of services to be offered. Consulting auditors rely heavily on group facilitation and interviewing techniques to identify problem sources and alternatives and to bring about consensus on recommended solutions. In most cases, consulting assignments focus on process rather than organizational structure, although some assignments include getting separately organized elements to work together.

From an audit department perspective, consulting assignments provide many potential benefits:

* Expansion of internal auditing's knowledge of the business.

* Greater use of benchmarking.

* Development of databases of internal and external contacts and best practice concepts.

* Application of cost analysis methods learned in other traditional audits.

* Use of flowcharting adaptations and process reengineering skills.

* Enhancement of project management skills on multi-task assignments.

* Enrichment of the company's knowledge of internal auditing's ability to apply techniques in new situations, such as control self-assessment, facilitation, and process documentation.

Consulting assignments are clearly win-win relationships for auditors and their customers. The typical assignment -- if there is such a thing -- includes several steps, from marketing to post-implementation review.

MARKETING Internal auditors need to identify consulting opportunities within their organizations. Establishing a "business expertise" concept within the audit group, where each auditor identifies an area of the business in which he or she will focus market development efforts, is a step in that direction. It is internal auditors' responsibility to develop relationships within these areas of expertise so that they have advance warning when an area is considering issues on which the audit department might assist. Additionally, the auditor is responsible for becoming knowledgeable about the area's processes, policies, business plans, performance measures, and incentive compensation objectives, among other things.

BIDDING Once a consulting opportunity surfaces, internal auditing should present itself as a potential service provider. In some cases, this requires the audit department to get on the bidders' list and prepare a formal bid package documenting an approach, staffing qualifications, experience, and the overall benefits of using an internal resource to perform the project.