Effective internal auditor management: Developing auditor skills

Audit skills for the future

It is important that you are clear about the skills, knowledge, and behaviors you need to be successful, not just now but into the future as well. These skills should include agile audit, data analysis, continuous risk assessment, and communications and stakeholder engagement. Identifying the right skills has never been more important, considering the pace of change all organizations are facing, the ever increasing use of technology (including using AI responsibly), and the enhanced sophistication of data analytics.

Are you clear about the skills and knowledge needed for future success? Have you set this out in a simple capabilities framework so your team understands what they should be working toward?  When completed, it allows you to examine where potential development support is available to help every team member work toward the desired skills and knowledge. And of course, you need to ensure, when signposting development to the team, that you remember how people learn. This is sometimes referred to as the 70-20-10 model: 70% of learning is done through job related experience, 20% is delivered through coaching and the observation of others, and just 10% of learning is satisfied through more structured, formal learning. Understanding this will help you build your development program accordingly.

Business acumen

It is vital that you focus on developing business acumen throughout your team. High performing internal audit teams understand the business they are auditing. This means having an intimate understanding of its products, customers, risks, and competition. There are a range of ways that teams achieve this. For example, they may ask speakers from the business to talk about their respective areas or have instructional sessions led by various other experts. But one approach I particularly like is ensuring that everyone in the function has some level of business experience. This can be achieved in many ways, including direct recruitment, but progressive functions look to build a permanent two-way flow of talent both from audit into the business and from the business into audit. Some organizations establish schemes to achieve this flow. For example, one internal audit function established an ambitious goal that fifty percent of the function’s employees would have had a business secondment over a five-year period. 

Focus on careers

It’s important that your approach to colleague development has a strong focus on career development. This is a key motivating area for most employees. Although it’s clear that individuals need to manage their own career, based on their aspirations and personal circumstances, managers play an important role in guiding and advising their direct reports. Careers for auditors can take on a multitude of directions. While many become career auditors, others may be more interested in developing their business understanding using audit as a path into front line business roles. Others may build specialist skills, perhaps around specific risk types or audit techniques such as outcome testing or data analytics. Indeed, others may aspire to obtain more senior leadership roles. All of these are fantastic options and managers should support their team as much as they can through inspired coaching conversations that encourages them to fulfill their potential.

Operationalizing your people management activity

Frameworks, like the one presented throughout this series of articles, are only as good as how they are operationalized. Two observations that will increase the impact of your people management activity include:

1. Have a genuine management focus that goes beyond just paying lip service. How is this accomplished? Ensure that people management activity is a standing item up front and not added at the end of your key management meetings. Provide a clear agenda of the activities that the leadership team needs to perform together to ensure that people management is excellent throughout the function. This will include areas around regular talent management reviews, succession planning, pay and bonus setting, development activity assessment, and so on.
2. Measurement of success is also important. Make sure that you have appropriate metrics in place and that they are regularly measured. These will provide the necessary insight about how you are performing. The metrics needed will be specific to your function and the people management challenges and priorities that you have at that point in time. A people strategy scorecard example is shown below.

Conclusion

This four part article series set out to explore the important aspects of effective internal auditor management activity – attract, reward, manage, develop.

We explored the importance of using a range of recruitment selection methods (e.g. case studies, role plays, and data analysis) that not only identify the best candidates, but also offer the prospective hire a genuine insight into what it is like to work in your function. We also looked at how AI can improve the effectiveness and efficiency of your recruitment initiatives. Finally, we saw how you can ensure that your onboarding of new recruits goes beyond administrative tasks and plays a critical role in helping new employees become successful, engaged, and integrated members of your team.

We examined the importance of ensuring your reward practices support and reinforce audit independence. We also identified the importance of communicating all that is rewarding about your organization and the internal audit function. High performing internal audit functions develop an employee value proposition, a statement of what is rewarding about working for the internal audit function.

It was identified how important it is to develop a clear line of sight from your business and internal audit strategies through to everyone’s personal objectives. Supporting this with servant leadership – where leaders focus primarily on the growth and well-being of people and the teams to which they belong – and active management – including management fundamentals such as effective meeting facilitation, action planning, and strategic thinking across the internal audit function.

Lastly, we finished by focusing on what skills are essential for the future success of internal auditors, including developing business acumen and supporting the management of their careers in an increasingly interconnect world.

Whilst each individual aspect is important, it is the activity under each area working together that drives the most successful internal audit functions forward. Those that are committed to the framework and willing to put forth the effort will achieve the best out of all their people.