“We didn’t do anything wrong, but somehow, we lost.” This was how Nokia Chief Executive Officer Stephen Elop ended his speech during a press conference in 2013 to announce that the company had been acquired by Microsoft.
As an auditor, you might be wondering what this statement has got to do with us. When I read this very brief article on the internet, the statement sent a resounding vibration in my head, making me wonder a lot about our business operations. Are we running out of ideas, or is the world just changing too fast?
You must have heard your stakeholders raising the bar for internal audit performance due to the unpredictable business climate and challenging regulatory environment in which we operate. How do we respond to these expectations? Internal audit (IA) promotes quality and innovation through well-defined standards that align with the overall standards by the Institute of Internal Auditors (IIA) (and any sector-specific regulatory or domain standards). The IA function performs formal quality and promotes a culture that rewards innovation and continuous improvement of core processes.
In a recent Philippine Airports Summit, I learned about innovation igniters and I believe the concepts presented by the speaker are equally relevant to our internal audit profession. Let me share with you some of these innovation igniters and how they can further spark our contribution to your organizations:
Slipping Key Performance Indicators (KPIs) might be an indication of a much-needed process improvement evaluation, or it could be that the KPI is no longer relevant to the current business environment.
Capacity constraints create the need to continuously think about sourcing alternatives or potential order management handling issues contributing to the constraints experienced.
High operating expenses (OPEX) is a constant area of focus, oftentimes leading to cost reduction programs. An important area of consideration is that while the bar on performance has been raised several times, the budget might not have followed suit.
Overlooked user feedback. Third-party feedback is an area you can mine for potential new ideas or opportunities that your customers themselves want to experience and which may be beneficial to your organization, too.
Lack of exposure to best practice. Learning from other organizations—from the successful to the not-so-successful ones—certainly opens new doors and windows of opportunities, as these would give you insights not only on what could work for your organization but also what you need to avoid in your operations.
At first glance, these may all seem too easy to comprehend. But the bigger, and perhaps more important, questions we should ask ourselves are: What do we really do about these? What can we, as internal auditors, contribute in respect to these areas?
To help us answer these questions, we may need to embrace further the idea of creating smaller, consulting reviews, as opposed to conducting full-blown audits. This will allow us to be seen more as a trusted advisor or business partner. In terms of work efficiencies—that would be lot, too!
Some of the innovation endeavors you could explore to potentially touch on these points are as follows:
Paperless processing. Look into areas where we fill out documents that might be redundant, as this will save time and space. Review the so-called “required” documents to support a transaction and see what controls would be compromised if we did away with some of these documents such as the need for using and maintaining logbooks. Can the data posted in the logbooks be captured electronically? What value do these logbooks serve to address a control risk?
Changing sequence of processes. There might be areas in your processes that can be challenged to question the order of things. While you might have done all the steps in the past in a very traditional manner, there is no harm in doing a simulation of new initiatives and see the impact of rearranging them. Take the traffic in EDSA as an example. A lot of ideas and suggestions have been put on the table to see what new routes to take, what new policies to cascade and the like. There will always be a better way. You just need to test your wild imagination to make things work.
Revisiting module for behavioral training. The root cause of your problems might be in the area of people behavior. Inasmuch as you do not want rapid changes that might disrupt the business, this is not within our control. You can consider talking with your human resources people to relay the issues you have on the ground and to give your inputs on potential topics to be addressed in future learning and education programs. A change in the culture might go along way.
Enhancing self-dependency mechanism. My take on this area is in relation to the use of technology. Some of your processes can be reduced if you give your customers, supplier and other stakeholders the mechanism to do certain things themselves like electronic submission of data, updating of data, tracking mechanism for product orders, available FAQs site and the like. On the other hand, technology can be costly for some organizations. You can relook at your style of communication to your stakeholders. If you find areas where you feel that it takes a lot of our resources to address them, then you might not be effective in this aspect. If your stakeholders showed better understanding of your business, processes and policies, you would be more efficient in conducting your businesses with various stakeholders.
Illuminating the future
A few days ago, the world was treated to the brightest supermoon in 68 years and the pictures are stunning. It was, indeed, a rare treat for skygazers. The full moon will not get close to us again until November 2034. In today’s demanding business and regulatory environment, which requires an evolution in the way we do our work and interact with our stakeholders, we are challenged to have our own supermoons more frequently. Daunting as the task may be, the future will be larger and brighter for as long as we up our game and relevance!
Geraldine Hammond-Apostol is a Risk Assurance Leader, Chief Audit Executive and Transformation Leader of Isla Lipana& Co./PwC Philippines. Email your comments and questions to email@example.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
GERALDINE H. APOSTOL