Say It Right

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www.globaliia.org Say It Right Presentation to IIA Granite State Chapter 9 May 2013 Phil Tarling Chairman of the Global IIA Board

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Say It Right. Presentation to IIA Granite State Chapter 9 May 2013 Phil Tarling Chairman of the Global IIA Board . Background to the Speaker. Vice President, IA Centre of Excellence, Huawei Chairman - Global IIA Immediate Past President of the ECIIA (2010-2011) - PowerPoint PPT Presentation

Transcript of Say It Right

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Say It Right

Presentation to IIA Granite State Chapter 9 May 2013

Phil TarlingChairman of the Global IIA Board

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Vice President, IA Centre of Excellence, Huawei Chairman - Global IIA Immediate Past President of the ECIIA (2010-2011) Past President of the IIA UK and Ireland (2005-06) Provided Capacity building in Internal Audit & PIFC since 1998 Worked in the UK, Estonia, Latvia. Lithuania, Poland, Hungary,

Czech Republic, Kenya, South Africa, Romania, Macedonia, Croatia, Serbia, Kosovo and Turkey

Now responsible for developing internal audit capacity in a worldwide Chinese owned telecoms company

Background to the Speaker

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AgendaSome Real Changes in the past decade

New Communication

The Internal Auditor –Communication & Understanding

Internal Auditing in the 20 Teens

Better Communication is the answer

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Some real changes in the last decade

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Some real changes

The profession - founded in 1941

With Europe at war -and the rest of the world not far off

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Some real changes…

The profession – developing a new look in the two thousand and tens

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From Clipboard

To Tablet

Some real changes…

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Some real changes…

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Some real changes…

The Auditor with a Tablet

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Some real changes…July 2012 – China Takes Second spot from Japan

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Some real changes…

The BRICS announced the

setting up of the bank, described as a

"BRICS-led South-South development

bank."

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But one thing everyone has…

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The one common feature…

NewCommunication

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New Communication

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New Communication…This new communication is INFLUENTIAL

Egypt protests organised through Social Media

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New Communication…This new communication BREAKS BARRIERS…

Syria unrest shown to the world on YouTube

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New Communication…The IIA’s very own AuditChannel.tv

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New Communication…

Social Media is being used for internal audit Professional Development and Enhancement

In the first 6 months, AuditChannel.tv had 3.2M hits

Is anyone still saying that Social Media is not important?

Our companies aren’t, nor is government

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New Communication…The UK Prime Minister’s Web Site

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New Communication…

Communication will help us shape the future, not only in

countries but within our companies

Communication goes across cultures, as much in company

cultures as externally

Communication is now instant so we

have to be ready for it

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New Communication…Communication comes in all shapes and sizes

BUT they all rely upon being listened to

WrittenThe written word is still persuasive

VisualWatching can provide insight

VerbalA discussion can lead to a

decision

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New Communication

To be heard You have to

have listeners

And to know who your

audience is

You have to listen as

well

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Communication

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The Internal Auditor Communication & Understanding

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The Internal Auditor -Communication

This is not new to Internal Auditors

Communication has always been a soft skill that auditors have developed, through reporting style and listening

But previously Internal Audit had a bad reputation.

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The Internal Auditor & Communication…We have moved onFocussed on risk,Determined to suggest solutions,Not hiding behind independence,Avoiding the sidelinesInvolved in the organisation’s success or failure

Internal Audit is now a key part of the business

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The Internal Auditor & Communication…We need to make sure that what we say:

not only has an audiencenot only that people are listening

But also that we

SAY IT RIGHT

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Internal Auditing in the 20 teens

Getting to the Top Table

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Getting to the Top Table Football managers often say that for the goalkeeper to miss a save, 10 other players must have missed

it before him. This third line role likens internal audit to that of a goalkeeper in a football match. When the ball is lost in midfield (first line) and the

defence (second line) fails to pick up the opposition’s attack, it is left to the goalkeeper (third line) to save

the day. There is a reasonable expectation that internal audit will identify the

weaknesses in both first and second lines and failure to do so may lead

to significant loss to the organisation.

1st line:Business

Management

2nd line:Risk Mgt /

Compliance / Others

3rd line:Risk Based Internal

Audit

External Audit and the Regulators are the Referee and Linesman

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Board of Directors/ Audit Committee

Senior Management

Operational

Managem

ent

1st Line of Defence 2nd Line of Defence 3rd Line of DefenceExternal Audit

RegulatorsQuality

Security

Enterprise Risk Management

Financial Control

Inspection

Ethics & Legal

Internal Control

Internal Audit

Getting to the Top Table DIRECTION

ASSURANCE

COM

PLIANCE

CON

TROL

RISKS

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Getting to the Top Table

The third line of Defence provides the outlet to the Audit Committee and Board

But the seat is not a vacant seat for the CAE to walk into

The seat at the Top Table has to be earned

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Scaling Greater HeightsBusiness is Focused on Risks: Top 10 Business Risks in 2011

Cost cutting

Non-traditional entrants

Radical greening

Social acceptance and Corporate Social

Responsibility

Executing alliances and transactions

Regulation and Compliance

Access to credit

Slow recovery or double-dip recession

Managing talent

Emerging markets

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Source: Ernst & Young Business Risk Report

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Risk Based Internal Audit

RBIA is not about identifying the Process Risk in the organisation

Risk Based Internal Auditing (RBIA) is a methodology that links internal auditing to an organisation’s overall risk management framework.

RBIA allows internal audit to provide assurance to the board that risk management processes are managing risks effectively, in relation to the risk appetite

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Meeting Stakeholder Expectations: Are we Being Honest With Ourselves?

Audit CommitteeExecutive

ManagementUnacceptable 0.0% 0.4%Poor 0.4% 1.9%Acceptable 16.1% 25.9%Good 57.6% 57.8%Outstanding 25.9% 14.0%

“If surveyed today on how well internal auditing is meeting its needs and expectations, my audit committee/executive management would probably rate their overall satisfaction…”

Source: Emerging Trends and Leading Practices Spring 2011, The Institute of Internal Auditors – Audit Executive Network

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Source: Ernst and Young Global Internal Audit Stakeholder Survey, November 2010 & January 2012

The View from the Other Side:

• Internal Audit needs improvement

• Improvement needs to be within 24 months

2010• 74%• 96%

2011• 80%• 70%

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Source: Internal Audit Research Foundation Survey, March 2012

Internal Audit should provide Insight

• Board Members• Executives• CAE

Agree/Strongly Agree

• 86%• 89%• 90%

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Source: IIA Research Foundation Survey, March 2012

Internal Audit frequently delivers Insight

• Board Members• Executives• CAE

Agree/Strongly Agree

• 61%• 38%• 66%

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My Internal Audit delivers Insight

• Board Members

• Executives• CAE

My Internal Audit

• 79%

• 56%• 81%

In general Internal Audit

• 77%

• 57%• 72%

Source: IIA Research Foundation Survey, March 2012

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Provide Insight

Insight should come through linking IA through RBIA with Risk Management and Governance in the organisation

Meet our Stakeholders’ expectations we need to ensure that we do what it is they want us to do

Educate the Stakeholders in what we can do

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Ascending to the Level of A Trusted Advisor

Relationships

Compe

tenc

e Capable but poorly aligned

Compliance function

Engaged but not strategic

Trusted advisor

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Communication is the answer

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Communication is the answer

We have to understand the messagesDo we know the language?

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Communication is the answer for IACAEs need to :

1. Listen to what the Board are saying directly and through the Audit Committee

2. Listen to what the senior executives are saying

3. Understand what the messages are

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Communication is the answer

Messages are often coded

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Communication is the answer for IA4. Make sure that what you are saying is to the

right people» Be careful of the “Reply All” button

5. Make sure that your communication is clear» Are your reports concise and in plain

language» Is it what you want to say?

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Communication is the answer for IA

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Communication is the answer

UseSimple Words

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Communication is the answer 6. Get a name as the “Advisor” to the Board and

Audit Committee; the “go to” person for business advice

7. Have regular informal interaction with the Audit Committee members and the Chairman

8. Go beyond just reporting audit results; be part of the business discussing business issues with senior Executives

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Communication is the answer 9. Regularly communicate to senior management

and the board:– Emerging risks facing the enterprise– Systemic trends on risks and controls

gleaned from audit results10. All the internal audit team need to be effective

communicators

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Thank you

Phil Tarling

Office: +441189208506Mobile: +447802656986

Email: [email protected]: @philtarling