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Say It Right

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)

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Say It Right

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

  2. Background to the Speaker • 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

  3. Agenda

  4. Some real changes in the last decade

  5. Some real changes The profession - founded in 1941 With Europe at war -and the rest of the world not far off

  6. Some real changes… The profession – developing a new look in the two thousand and tens

  7. Some real changes… From Clipboard To Tablet

  8. Some real changes…

  9. Some real changes… The Auditor with a Tablet

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

  11. Some real changes… The BRICS announced the setting up of the bank, described as a "BRICS-led South-South development bank."

  12. But one thing everyone has…

  13. The one common feature… New Communication

  14. New Communication

  15. New Communication… This new communication is INFLUENTIAL Egypt protests organised through Social Media

  16. New Communication… This new communication BREAKS BARRIERS… Syria unrest shown to the world on YouTube

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

  18. 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

  19. New Communication… The UK Prime Minister’s Web Site

  20. New Communication…

  21. New Communication… Communication comes in all shapes and sizes BUT they all rely upon being listened to

  22. New Communication

  23. Communication

  24. The Internal Auditor Communication & Understanding

  25. 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.

  26. The Internal Auditor & Communication… We have moved on Focussed on risk, Determined to suggest solutions, Not hiding behind independence, Avoiding the sidelines Involved in the organisation’s success or failure Internal Audit is now a key part of the business

  27. The Internal Auditor & Communication… We need to make sure that what we say: • not only has an audience • not only that people are listening But also that we SAY IT RIGHT

  28. Internal Auditing in the 20 teensGetting to the Top Table

  29. 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

  30. Getting to the Top Table DIRECTION Board of Directors/ Audit Committee ASSURANCE Senior Management • Internal Audit 1st Line of Defence 3rd Line of Defence 2nd Line of Defence Operational Management External Audit Regulators Internal Control Financial Control Security COMPLIANCE RISKS CONTROL Inspection Quality Enterprise Risk Management Ethics & Legal

  31. 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

  32. Scaling Greater HeightsBusiness is Focused on Risks: Top 10 Business Risks in 2011 1. Regulation and Compliance 6. Cost cutting 2. Access to credit Non-traditional entrants 7. 8. 3. Slow recovery or double-dip recession Radical greening 9. 4. Managing talent Social acceptance and Corporate Social Responsibility 10. 5. Emerging markets Executing alliances and transactions Source: Ernst & Young Business Risk Report

  33. 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

  34. Meeting Stakeholder Expectations: Are we Being Honest With Ourselves? “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

  35. The View from the Other Side: Source: Ernst and Young Global Internal Audit Stakeholder Survey, November 2010 & January 2012

  36. Internal Audit should provide Insight Source: Internal Audit Research Foundation Survey, March 2012

  37. Internal Audit frequently delivers Insight Source: IIA Research Foundation Survey, March 2012

  38. My Internal Audit delivers Insight Source: IIA Research Foundation Survey, March 2012

  39. 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

  40. Ascending to the Level of A Trusted Advisor Capable but poorly aligned Trusted advisor Competence Compliance function Engaged but not strategic Relationships

  41. Communication is the answer

  42. Communication is the answer We have to understand the messages Do we know the language?

  43. Communication is the answer for IA CAEs need to : • Listen to what the Board are saying directly and through the Audit Committee • Listen to what the senior executives are saying • Understand what the messages are

  44. Communication is the answer Messages are often coded

  45. Communication is the answer for IA • Make sure that what you are saying is to the right people • Be careful of the “Reply All” button • Make sure that your communication is clear • Are your reports concise and in plain language • Is it what you want to say?

  46. Communication is the answer for IA

  47. Communication is the answer Use Simple Words

  48. Communication is the answer • Get a name as the “Advisor” to the Board and Audit Committee; the “go to” person for business advice • Have regular informal interaction with the Audit Committee members and the Chairman • Go beyond just reporting audit results; be part of the business discussing business issues with senior Executives

  49. Communication is the answer • Regularly communicate to senior management and the board: • Emerging risks facing the enterprise • Systemic trends on risks and controls gleaned from audit results • All the internal audit team need to be effective communicators

  50. Thank you Phil Tarling Office: +441189208506 Mobile: +447802656986 Email: phil.tarling@huawei.com Twitter: @philtarling

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