I have been in the accounting public practice industry for more than 25 years and have been privileged to be exposed to various industries and stakeholders. I have witnessed firsthand how the business world has changed so much, especially in recent years due to changes in economic conditions, rapid globalization, and the emergence of new risks. I have likewise noticed that as changes take place, businesses have to deal more and more with a variety of stakeholders who have different expectations or increasing demand. These scenarios are creating a dynamic environment and new opportunities not only for businesses but also for the internal audit function as revealed in PwC’s 2016 State of the Internal Audit Profession study.

    According to a recent survey conducted by PwC US of over 1,600 chief audit executives (CAEs), senior management and board members, internal audit functions that have very effective leadership perform better and add greater value to their businesses. In fact, more than half of the stakeholders who participated in the study now believe that internal audit is contributing significant value. The study also highlights the fact that 62 percent of stakeholders expect more value from internal audit, with 55 percent expecting internal audit to be a more proactive trusted advisor within the next five years.

    Jason Pett, PwC’s internal audit solutions leader, said, “We’re seeing a close correlation between strong leadership and internal audit’s ability to add value and deliver high performance. To continue fostering internal audit functions to become trusted advisors within their organizations, stakeholders should promote strong internal audit leadership, while audit executives work to elevate the performance and perceptions of their respective functions.”

    With the value that the internal audit function brings to the business, it is only right that profit and non-profit organizations alike pay more attention to internal audit. In relation to this, I am sharing below the five actionable characteristics, according to the PwC report, that are consistently exhibited by the most effective internal audit leaders, which key business decision makers, or perhaps even our government, can consider as they build on their internal audit function:

    1. Create and follow through on a vision

    According to the report, very effective internal audit leaders possess a strong vision that aligns with both a company’s strategic direction and stakeholders’ expectations. These very effective leaders translate their visions into strategic plans and also invest in capabilities in support of their vision. The internal audit profession is evolving and very effective leaders are innovating processes by increasingly investing in data analytics and technological tools.

    In my experience, the vision therefore should be shared with the Audit Committee, as well as the management for the plans to come into being. Presenting the vision is just one part of the picture and this is achieved through the complete “buy in” of your stakeholders, especially since some of the action points to get to that vision might require significant investments and changes in the way you execute your work.

    2. Source and retain the right talent

    The study highlighted a fact that CAEs identified talent shortages as the most significant barrier to increasing their contributions as leaders, and as business transformation continues to evolve, additional new skills are needed. To be a very effective internal audit leader, they must exhibit two talent behaviors that stand out from the pack: a focus on mentorship and talent development, and an ability to source the right talent when needed.

    PwC’s report showed that those very effective leaders have a “no hierarchy in the room” policy, which facilitates staff development through open discussion and working as a team to solve problems. The study also showed that the majority of very effective internal audit leaders—73 percent – use co-sourcing as a part of their talent strategies.

    Effective Chief Audit Executives know that the talent model includes the incorporation of regular training and performance feedback to enhance the teams and to facilitate growth and individual leadership development. It is critical that there is a right balance of technical and soft skills. Mentoring should likewise be part of the talent model. Among the questions which effective leaders should ask related to mentoring are:

    • What opportunities can I give my team so that they can learn from me more?

    • How do I effectively let them lead so I can work behind the scenes?

    Immediate feedback is also key to this process. Debriefing on what has just transpired from a meeting or from an update discussion on the status of the work is quite an easy thing to do and should become a habit in the workplace. However, this is easier said than done because we need to be sensitive about differences in personalities. I believe that over time though, this habit will be welcomed with open arms. This event is something to look forward to, as the benefits are enormous.

    3. Empower the internal audit function

    Empowerment by stakeholders is a clear factor in the organizational position of very effective internal audit leaders. According to the PwC report, 78 percent of very effective leaders are vice presidents or hold senior positions in their organization. Stakeholders also shared they are gravitating toward more senior leadership talent to fill the CAE role, and acknowledged their responsibility to empower the CAE by setting a culture that supports the importance of a strong control environment.

    My take on the matter is that positioning is a two-way street. Internal audit leaders need to take responsibility to build their own stature in the organization through active participation in executive meetings and proactive sharing of perspectives on strategic risks.

    4. Demonstrate executive presence

    In the report, nine out of 10 very effective internal audit leaders excel in demonstrating executive presence, bringing bold perspectives and thinking broadly about the company. Internal audit leaders must inform, educate and influence stakeholders, as well as earn their trust, but they face a difficult communication challenge where internal audit functions have to communicate with a variety of internal and external stakeholders who each have different expectations of the function.

    What kinds of behaviors are exhibited by these very effective leaders? Visual reporting and dashboard analytics are becoming popular as their impact on the stakeholders is very powerful. Metrics included in these reports go beyond the standard scorecard metrics such as the number of audit findings per report or percentage of completion against audit plans.

    5. Partner with the business in meaningful ways

    Partnering with the business in meaningful ways sets certain internal audit leaders apart. PwC’s report says internal auditors should be able to stand out in three specific behaviors to become a very effective leader: 1) develop relationships built on trust, 2) build partnerships across the lines of defense to play greater roles in coordinating risk management across functions and 3) use those connections to raise their level of engagement across the organization, taking on leadership roles in working with management, compliance, legal, and other assurance functions to develop an integrated assurance strategy.

    The reception of our CAEs and Internal Audit Leaders here in the Philippines is very encouraging. From the three recent fora we held with them to cascade the results of the survey, strategic alignment and vision stood out as the two main characteristics of a very effective leader. Our CAEs continue to proactively engage with their stakeholders to really get the definition of the value they are looking for. A lot of great ideas were shared with the participants and it was a truly productive session for all of them. For those in the regulated industry particularly financial services, it is evident that a lot has been done toward addressing this area on leadership and much remains to be done to be able to maintain or keep with the times, most especially on areas concerning technology.

    In an era of ever evolving and seemingly more complex business, effective leadership indeed makes a difference and matters significantly to our stakeholders. The function and contribution of internal audit to the success of the business are likewise critical now more than ever. While these surely bring a heavy challenge to internal audit leaders to manage the internal audit’s direction to stay completely aligned with the organization, these likewise make the life a leader exciting.

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    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 markets@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.


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    1. The cornerstone of each and every business is the internal audit. Corruption in our government is 100 per cent due to the failure and or corrupt auditors. PDAP is so easy to locate if you are a good or even an average auditor. There is a release paid expenditure. Did the auditor checked where the monies was paid ? In the Napoles case, all the monies were taken without any completed projects. Hundreds of millions were lost because of corrupt auditors.

    2. Joshua Schneider on

      Well written about a topic so dear to any businessman’s (or businesswoman’s) heart, the bottom line. One of the best tools stock holders and business owners have.