There is less than cordial relationship between internal audit and management.
One of the reasons is management believes that internal audit does not add value, whereas Internal audit believe that management is not adhering to best of the practices and most ethical behavior.
However, both believe that they are taking actions in the best interest of the organization. While internal auditor is attempting to bring the independent objective approach, management is looking for approaches which are relevant and practical.
Below are some areas where a balanced view can help increase engagement and management will get increased value from internal audit.
| Area | Management view | Internal Audit View | Balanced View |
| Internal Controls | Internal Controls are what we have defined. | Internal Controls are what industry follows | Internal controls are process as management had defined. Once management had defined a process, it needs to be adhered to. Any design GAP need the attention of management to revise the process. |
| Compliances | Compliances is required if it does not impact my competitiveness. | Compliance is what is written in the bare act and latest judgement | Compliance is a sensitive subject. While it is easy to read the English of the laws, their interpretation is extremely complex. In case of any difference of opinion, management should take an opinion from legal expert and define process which organization need to adhere to. Internal Audit will verify the process based on documented design of the process. |
| Industry Practices | We are doing something right which is different from industry and allowed us to have good market share. | Company should follow industry best practices | Industry best practices are there for a reason. However, it does not mean that a company cannot define still better practices. If google had followed, industry best practices, it might have been sold to Microsoft or Yahoo. Following industry best practices blindly, may hurt a company. |
| Exception | We are running a business. In the business, we need to take decision to ensure that we are not slave to process | There should be minimum exception | Business is a dynamic. Exception should be minimum. At the time of process design, nature of exception, who is authorized to take decision, up to what limit, should be defined. |
Call for action:
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(Disclaimer: The views expressed constitute the opinion of the author and the author alone; they do not represent the views and opinions of the author ’s employers, supervisors, nor do they represent the view of organizations, businesses or institutions the author is, or has been a part of.)
