Universities are more integrated, more interdependent and more diverse than ever, while internal audit is tasked with doing more with less. All of these factors create significant challenges for traditional internal audit operating models. Meeting management’s expectations in this dynamic environment requires a new mindset. The need to respond to the latest headlines, attacks and case studies necessitates a more nimble approach that permeates everything from planning to execution to reporting.
While there is no one-size-fits-all approach, there are some common attributes within an innovative framework that internal audit departments should strive to achieve. Embedding innovation into internal audit's DNA requires a focus on three pillars: skills, culture and infrastructure. Auditors must be able to think critically, solve problems and constantly want to learn more. They should study a broad range of topics to increase their knowledge, be alert to obstacles to innovation and make time to analyze problems more deeply. They also should possess strong business acumen and communication skills, as well as understand industry tools, methods and practices.
Skills: Internal audit should have a structured learning program in place that includes formal, informal and social learning. The development process should use workshops, conferences, classroom-based and online training, personal readings and networking. The time allotted to learning should exceed the traditional 40 hours a year. Developing an innovative mindset requires a personal investment of time, high energy and drive and a long-term commitment. Internal audit should be the best-read, best-connected and best-informed group within the organization. Members of the University’s Internal Audit Department go to a number of conferences, workshops and seminars – both in person and online - on different topics to help expand their knowledge base and develop analytical skills. They also teach classes to staff related to audit and fraud topics a number of times throughout the year. This helps them develop and maintain communication skills as well as make connections across the campus.
Culture: The department’s culture must support innovation by providing an environment where failure is accepted and innovation is cultivated intentionally by rewarding sensible risk-taking, trial-and-error experimentation and flexible and adaptable management philosophies. The culture must be characterized by empowerment, trust, openness and formal and informal continuous learning. Participation in internal and external networking forums is expected and encouraged. Members of the Internal Audit Department have and continue to audit various colleges, departments and units around campus that have not been audited in a while. For example, in FY2016, auditors reviewed Belk College of Business; capital campaign; Office of Study Abroad; and Student Union, Activities and Recreation (SUAR). Auditors employed a range of techniques and procedures and were not afraid to try ones recently learned. "Our goal is to analyze problems deep enough to suggest practical solutions to University management."
Infrastructure: The internal infrastructure must support innovation by incorporating effective project management, change management, budgeting and scheduling processes; providing tools that harness knowledge and facilitate learning and collaboration; and redefining metrics that measure success. The University’s Internal Audit Department uses a powerful data analytics software called IDEA to perform test work. This software reviews whole databases rather than having to settle for just a small sample of transactions. It helps spot trends and anomalies in the data and makes value-added recommendations to the campus units. The department has developed a range of useful templates that standardize how information is captured and provides reminders when tests must be performed. The department does well on internal and UNC system metrics as auditors aim to complete the audit plan in a timely fashion.
For a sustainable, innovative environment, all three pillars must be in place. This is always easier said than done. Auditors must be inquisitive, associative thinkers and learners who grapple with the issues that matter and generate fresh insights that challenge University management to think in new ways. Embedding sustainable innovation into an internal audit department's system takes hard work. However, once auditors imagine the possibilities and begin taking steps toward realizing them, the momentum they establish is hard to stop.
During May’s observance of Internal Audit Awareness Month, Inside UNC Charlotte has published a series of articles to help the campus better understand the role of internal audit.
- See more at: http://inside.uncc.edu/news-features/2016-05-31/internal-audits-journey-lifelong-learning#sthash.8HaTRvdr.dpuf