Wednesday, June 01, 2016 9:12AM /PwC
Firm outlines five characteristics of very effective internal audit leaders that help achieve stakeholder alignment and better performance
PwC Nigeria, a leading professional services firm, has called on Internal auditors in Nigeria to focus on leadership as this will increase their value contribution and help the broader organisation address emerging risks, adding that Internal audit functions with very effective leadership perform better and add greater value to the business.
This call was made by Femi Osinubi, Associate Director Risk Assurance, PwC Nigeria at a breakfast meeting to discuss findings of PwC’s 2016 State of Internal Audit Profession (SOTP) survey report: Leadership matters: Advancing toward true north as stakeholders expect more which held on Thursday 25 May 2016.
The breakfast meeting, which was held in conjunction with the Institute of Internal Audit (IIA) Nigeria with the theme “Stakeholders expect more from internal audit”, was part of activities held by both organisations to mark this year’s International Internal Audit Awareness month. It had in attendance, internal audit professionals, Risk and Compliance personnel, audit committee members and business leaders drawn from various sectors of the economy.
The 2016 SOTP survey report presents the views of over 1,600 chief audit executives (CAEs), senior management and board members. The report among other things provides insights on how companies which today face more risks than ever, are looking to their internal audit functions to deliver value by educating stakeholders on emerging risks and leading risk management practices that would improve the business.
While presenting the report, Osinubi noted that more than half of the stakeholders who participated in the 2016 study believe internal audit is contributing significant value – up six points from 2015. The study also highlights 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.
“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.
“It’s through close alignment with various stakeholders and owning internal audit’s role as a leadership function within the organisation that can allow internal audit to help their companies keep up with the changing business and risk landscape. But all this can’t be said and done without a clear vision, supported by a strategic plan and enabled with top talent,” Osinubi said.
The report outlines five actionable characteristics that are consistently exhibited by the most effective internal audit leaders:
1. Create and follow through on a vision
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.
2. Source and retain the right talent
PwC’s study highlighted 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 behaviours that stand out from the pack: a focus on mentorship and talent development, and an ability to source the right talent when needed.
3. Empower the internal audit function
Empowerment by stakeholders is a clear factor in the organisational position of very effective internal audit leaders. According to PwC’s report, 78 percent of very effective leaders are vice presidents or hold senior positions in their organisation.
4. Demonstrate executive presence
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.
5. Partner with the business in meaningful ways
Partnering with the business in meaningful ways sets certain internal audit leaders apart. PwC says internal auditors should be able to stand out in three specific behaviours to become very effective leaders: 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.
Other speakers at the breakfast meeting included Mrs Funmi Oyetunji, Chair Risk Committee, Eco Bank who highlighted the need for internal auditors to become business savvy and more proactive in their approach to considering business drivers, competencies, strengths and weaknesses within the organisation and being trusted advisors to leadership. Mr Dale Rollins, MD SAPETRO, noted the need for the internal audit function to be part of the management team hence being a part of the surgery, and not just the autopsy.
On his part, Mr Michael Ikpoki Former CEO MTN Nigeria looked at internal audit in the context of the current business environment with regulatory uncertainty, shrinking GDP, technological disruption etc and identified three areas of attention for internal auditors viz vision & strategy, execution and influence concluding that practitioners need to demonstrate clear value to be better appreciated.
Humphrey Okorie, President of the Institute of Internal Audit (IIA) Nigeria, speaking on the celebration of the Internal audit awareness month called on all in attendance to become advocates of the profession and invited all practitioners to reach out to the institute to access important information and resources to build their capacity and address challenges they may encounter on their jobs.