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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

Say It Right

Presentation to IIA Granite State Chapter

9 May 2013

Phil Tarling

Chairman of the Global IIA Board

background to the speaker
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
some real changes
Some real changes

The profession - founded in 1941

With Europe at war -and the rest of the world not far off

some real changes1
Some real changes…

The profession – developing a new look in the two thousand and tens

some real changes2
Some real changes…

From Clipboard

To Tablet

some real changes4
Some real changes…

The Auditor with a Tablet

some real changes5
Some real changes…

July 2012 – China Takes Second spot from Japan

some real changes6
Some real changes…

The BRICS announced the setting up of the bank, described as a "BRICS-led South-South development bank."

new communication1
New Communication…

This new communication is INFLUENTIAL

Egypt protests organised through Social Media

new communication2
New Communication…

This new communication BREAKS BARRIERS…

Syria unrest shown to the world on YouTube

new communication3
New Communication…

The IIA’s very own AuditChannel.tv

new communication4
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

new communication5
New Communication…

The UK Prime Minister’s Web Site

new communication7
New Communication…

Communication comes in all shapes and sizes

BUT they all rely upon being listened to

the internal auditor communication
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.

the internal auditor communication1
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

the internal auditor communication2
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

getting to the top table
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

slide30

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

slide31

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

scaling greater heights business is focused on risks top 10 business risks in 2011
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

slide33

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

meeting stakeholder expectations are we being honest with ourselves
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

the view from the other side
The View from the Other Side:

Source: Ernst and Young Global Internal Audit Stakeholder Survey, November 2010 & January 2012

internal audit should provide insight
Internal Audit should provide Insight

Source: Internal Audit Research Foundation Survey, March 2012

internal audit frequently delivers insight
Internal Audit frequently delivers Insight

Source: IIA Research Foundation Survey, March 2012

my internal audit delivers insight
My Internal Audit delivers Insight

Source: IIA Research Foundation Survey, March 2012

slide39

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

slide40

Ascending to the Level of A Trusted Advisor

Capable but poorly aligned

Trusted advisor

Competence

Compliance function

Engaged but not strategic

Relationships

communication is the answer1
Communication is the answer

We have to understand the messages

Do we know the language?

communication is the answer for ia
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
communication is the answer2
Communication is the answer

Messages are often coded

communication is the answer for ia1
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?
communication is the answer4
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
communication is the answer5
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
thank you
Thank you

Phil Tarling

Office: +441189208506

Mobile: +447802656986

Email: [email protected]

Twitter: @philtarling

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