Relationships and Risk
Insights from Stakeholders
CBOK
Stakeholder
Study
Agenda
Primer on
“Critical NonTechnical
Skills”
About the Stakeholder Study
Global Surveys
1,124
The purpose of the Common Body of
Knowledge (CBOK) 2015 stakeholder study
is to gain a better understanding of global
stakeholders’ expectations with regard to
internal audit’s purpose, function, and
performance.
This study was developed in partnership
between The IIA Research Foundation and
Protiviti.
Global Interviews
100+
IIA
Institute
Partners
13
Languages
www.theiia.org/cbok
23
General Themes
Internal audit does many things well that could be considered foundational
elements of assurance work.
There are opportunities for internal audit to add value to their
organizations by spending more time focusing on risk identification and
management in addition to assurance work.
Internal audit should focus more on strategic risks, but exactly what the
stakeholders mean by that is less than clear or consistent.
Increased demands on internal audit will require CAEs to prioritize
competing demands. Managing these conflicts requires strong relationship
and communication skills.
Stakeholders Give
Internal Audit High
Marks on
Foundational
Elements
High Ratings in Foundational Elements
More than 70%...
More than 80%...
Top three criteria used to
evaluate the performance of
internal auditors:
Assess areas or
topics that are
significant.
Stakeholders agree or
strongly agree that
internal auditors:
Keep up to date
with changes in
the business.
Sufficiently
communicate
audit plans.
Expectations to Move
Beyond the Basics
Beyond Assurance
Many respondents note that they see value in advisory
services. What should this non-assurance work cover?
Identify known & emerging risk areas
85%
Facilitate & monitor effective risk
management practices by…
78%
Identify appropriate risk management
frameworks, practices & processes
78%
Consult on business process
improvements
Alert operational management to
emerging issues & changing…
Assurance on compliance with legal
and regulatory requirements
76%
74%
71%
The clear
answer is
“risk”
Focus on the Right
Risks
A Paradox of Structural Expectations
Do you believe IA should be more active with
assessing strategic risk?
Yes
58%
No
Unsure
24%
18%
How?
Focus on strategic
risks as well as
operational, financial,
and compliance risks
during audit projects.
Periodically evaluate
and communicate key
risks to the board and
executive
management.
A Paradox of Structural Expectations
Valued
Expected
Manage
Competing
Demands
Strategies for Prioritizing Competing Demands
Strong relationships with operational
and functional leaders
Effective reporting structure within the
organization, for example, reporting into
the C-Suite
77%
51%
Regular presence in appropriate board
or board committee meetings
49%
Involvement in enterprise risk
management
48%
Reporting directly to the audit committee
44%
Key Report Takeaways
Preserve the foundational elements
Explore adding more advisory work
Focus on risk activities
Demonstrate understanding of strategic risks
Build your soft skills
www.theiia.org/cbok
From “Soft
Skills” to
“Critical NonTechnical
Skills”: Some
Social Science
Behind
Auditing
Circle of Trust & Cooperation: In Group – Out Group Dynamics
Circle of Trust & Cooperation: In Group – Out Group Dynamics
In Group – Out Group Dynamics
In-group favoritism
• A preference and affinity for one's in-group over the outgroup or anyone viewed as outside the in-group.
• Expressed in evaluation of others, allocation of resources,
and many other ways.
• A key notion in understanding in-group/out-group biases is
determining the psychological mechanism that drives the
bias. One of the key determinants of group biases is the
need to improve self-esteem.
• Individuals will find a reason, no matter how insignificant,
to prove to themselves why their group is superior.
Source: Boundless. “In-Groups and Out-Groups.” Boundless Sociology. Boundless, 08 Jan. 2016.
Retrieved 13 May. 2016 from https://www.boundless.com/sociology/textbooks/boundless-sociologytextbook/social-groups-and-organization-6/types-of-social-groups-53/in-groups-and-out-groups-33810455/
In Group – Out Group Dynamics
Intergroup aggression
• Any behavior intended to ‘harm’ another person because he
or she is a member of an out group.
• A by product of in-group bias, in that if the beliefs of the ingroup are challenged or if the in-group feels threatened, then
they will express aggression toward the out-group.
• The major motive for intergroup aggression is the perception
of conflicting interests between in-group and out-group.
• The way the aggression is justified is through dehumanizing
the out-group, because the more the out-group is
dehumanized the "less they deserve the humane treatment
enjoined by universal norms. "
Source: Boundless. “In-Groups and Out-Groups.” Boundless Sociology. Boundless, 08 Jan. 2016. Retrieved 13 May. 2016
from https://www.boundless.com/sociology/textbooks/boundless-sociology-textbook/social-groups-and-organization-6/typesof-social-groups-53/in-groups-and-out-groups-338-10455/
Beware the “Super Chicken”
Mind Your Self Importance
“Every act of conscious learning
requires the willingness to suffer
an injury to one’s self esteem.
That is why young children,
before they are aware of their
self importance, learn so quickly.”
Thomas Szasz
Build Strong Professional Relationships Based on Integrity and
Trust
•
•
•
•
•
Do what you know is right
even in difficult times
Involve others in your
business
Understand others
business
Trustworthy = Honesty +
Competence + Reliability
Don’t hide behind
independence
Source: Lessons Learned on the Audit Trail by Richard
Chambers, IIA President and CEO
The 3 Stages of Auditor Self Awareness
Stage 1
You might
be wrong
No!
IA
Stage 2
You might
be wrong
Stage 3
Maybe
IA
I might be
wrong
IA
Beware of Logical Fallacies
“Most of us illogically believe
that we are logical thinkers”
Jason Silva
Logical Fallacies
Source:
https://yourlogicalfallacyis.com/
Provide a range in which the correct answer falls:
Distance between the Earth and Venus
(in miles)
Average number of bees in a hive
Population of Mauritius
Which way is the bus going?
Exploratory vs. Explanatory
Finding the two
pearls amongst one
hundred oysters.
Storytelling with Data: A Data Visualization Guide for Business Professionals
Cole Nussbaumer Knaflic
Building the Value Proposition for Your Audit
Collaborate
Understand
Explain
Align
Define
• Your
mission
• Internal
Auditing
• Audit
objectives
• Business
objectives
• Your purpose
• Audit process
• What’s in it for
management
• Management’s
expectations
• Attitude toward
being audited
• Assessment of
risks and
controls
• Root cause
analysis
• Action plans
Question
Jim Pelletier, CIA, CGAP
Vice President, Professional Solutions
[email protected]