Career Skills for Aspiring Auditors

1. Career Skills for Aspiring Auditors Beta Alpha Psi October 24, 2012 Richard Anderson MBA, CPAPartner (Retired) PricewaterhouseCoopers LLP Trustee – IIA Research Foundation

2. Where did this topic come from? The question I received from PwC staff; “What skills are most important to develop to qualify and be successful at higher levels in the organization?”

3. Agenda 1) Look at skills from two different perspectives; • Skills Development for You • Core / Traditional Skills • How they are evolving • Skills Now Needed for Higher Levels of Advancement Expectations of Your Key Stakeholders 2) Some thoughts on managing your career

4. First Response – Focus on Core/Traditional Audit Skills • People Management and Teamwork • Effective Communications • Technical Auditing Skills • Critical Thinking Skills • Business knowledge

5. Traditional Skills – Evolving and Changing IIA’s Audit Executive Center Spring 2012 Survey

6. Traditional Skills – Evolving and Changing Critical thinking skills • Most sought after skill in AEC semi-annual surveys last two years • Some IA groups are now testing for this skill

7. Traditional Skills – Evolving and Changing Business knowledge: • Consistently one of the top five skills since surveys were started by the AEC in 2008 • IA groups get this knowledge through a variety of ways • “Pre-condition” to enhancing risk assessments and providing assurance over risk management

8. Traditional Skills – Evolving and Changing Technical Auditing Skills: • Quite likely will include data mining and data analytical skills going forward as core technical skills expected of all staff

9. Traditional Skills • What wasn’t on the list?

10. Changing View of Traditional Skills • They are important “foundational” skills • Critical to “qualify” for consideration for upward movement • However: they are not necessarily the skills for long term success • Gets you into the game • May not be game winners at higher levels

11. Career Focused Skills • Not necessarily new, “undiscovered” skills • Have a higher significance and premium because of today’s more complex and more dynamic world • These skills demand more than just awareness; • Acknowledge the need to master, and • Actively develop the skills

12. Career Focused Skills All are applicable to auditors seeking high-level advancement inside or outside of the profession; “ Nearly seven in ten CAE’s see internal audit as a springboard for advancement into other executive management positions at their own companies or into a CAE role with greater auditory at a larger company” Grant Thornton Chief Audit Executive Survey 2011

13. Career Focused Skills More broad-based, personal attributes for future development; • Adaptability • Continuous Learning • Judgment • Talent and Diversity Management

14. Adaptability Charles Darwin: “……..it’s not the strongest of species that survives, nor the most intelligent, but the one that is most adaptable to change.”

15. Adaptability Def: The ability to change to fit changed circumstances. • Critical for long term career success • Proactive personal adaptation vs. reactive • Involves taking some personal risk • Experimentation • Improvisation “Future leaders will be people who adapt their jobs, working styles, and skills to stay ahead of the curve as they see change coming.” Dick Anderson – “Critical Skills for CAE Success”

16. Adaptability • CEO with his leadership team; • Question: • What will the organization look like in 10 years? • Response: • The only things CEO was certain of; • different organization • different industry • different business environment ……the ability to change to fit changed circumstances

17. Adaptability • A mindset • A positive perspective on change • An expectation that we have to continually adapt to take advantage of the changing environment • A willingness to take personal risks • Experiment • Improvise “Take control of your career rather than feeling you are being constantly whipsawed by change” – Dick Anderson

18. Continuous Learning Individuals must maintain personal relevance and capabilities by innovating and investing in themselves: • How do I continue to distinguish and differentiate myself? • What capabilities do I need to take advantage of new ideas and trends? • Where and how do I get the training or education I need Move away from just a CPE/Compliance mindset to one of continuous, personal learning.

19. Continuous Learning • Maintaining one’s personal and professional relevance • Requires personal commitment • An enabler of “adaptability” • More than just “continuing professional education”

20. Continuous Learning • Recent examples; • “Cloud” computing • Social media applications • Regulatory overload • “Cybercrime” • “XBRL” • “Big data” / “Unstructured data”

21. Judgment • Not a new skill but has become even more significant • Complexities of today’s world places a premium on this skill- “Trusted Advisor” • Critical for success as an auditor • Critical issue recognition • Risk prioritization • What, and to whom to communicate

22. Judgment as a Process Requires the development and exercise of good decision making skills “…the judgment tendencies and shortcuts that human beings often rely on can short-circuit such a process and as a results, our decisions can be biased.”

23. Judgment as a ProcessCOSO “Enhancing Board Oversight”

24. Judgment as a ProcessCOSO “Enhancing Board Oversight” Common Threats to Good Judgment: • Rush to Solve: select the first seemingly workable alternative • Judgment Triggers: an initiating force that triggers a decision • Overconfidence: leads to under investing in defining the problem, considering too few alternatives or skipping information • Confirmation: see and overweigh confirming information • Anchoring: anchor on initial information without being able to adjust away from that value • Availability: limit alternatives or information to what readily comes to mind

25. A Final Comment on Judgment • Might be on the verge of another personal attribute or a variation on the judgment attribute; • You also have to be able or have the courage to speak up and stand behind the good judgments and decisions you make

26. Talent and Diversity Management • The ability to acquire and nurture a diverse workforce • A shifting mentality from diversity as “a good social objective” to something that is “necessary to conduct business” • The continuing effects of demographics and globalization

27. Talent and Diversity Management Acquire and nurture talent and a diverse workforce; • How to acquire talent? • How to develop talented people? • How to challenge and reward? • How to build and operate diverse teams? • How to retain a talented diverse workforce?

28. Globalization Related to diversity, but presents new challenges: • Need to form and operate global teams that may never actually meet in person • Motivate people to accept international assignments • Recognize and reward staff for working outside the home country • Recognize and value nondomestic professional and academic credentials • Understand and manage cultural differences

29. What are the “skills” that your stakeholders expect? • “A Strategic Player” • Rittenberg & Anderson • Our attempt to look at CAE skills through the eyes of the stakeholders • Focused on 6 key criteria

30. 6 key criteria • Stature and presence • Understanding of the organization’s strategy • Strategic audit focus • Ability to exercise sound judgment and communicate clearly on audit issues • Development of human resources • Management of technical auditing activities

31. Some thoughts on managing your career Set long-term goals but manage your career in “orbits¹” “Orbits” • 2 – 5 year increments • activities that enhance your skills and experiences • prepares yourself to move to a “higher orbit” Source: Dr. Alex McKenna, McKenna International

32. Some thoughts on managing your career Create your own opportunities – Fix a big mess! • best way to • Gain unique experiences • Get noticed!

33. Some thoughts on managing your career Always understand the needs of an employer or potential employer • avoid mis-alignment • match with your skills (this is why Dick was never a capital markets trader!)

34. Some thoughts on managing your career Constantly challenge yourself; “What am I bringing to the table?” • How are you differentiated from your peers? • Look at your resume • Facts vs qualitative attributes • How do you interview?

35. Some thoughts on managing your career Understand the role and nature of compensation It is very important to all of us, however; • it is not a long-term motivator • it is a dynamic not a static event • it can be a major reason why a new job or opportunity does not work out

36. Some thoughts on managing your career A final rule in managing your career; • Communicate • Communicate • Communicate some more!

37. “While training and support for personal development are expected from any good employer, above all, personal development is a shared, personal responsibility of each individual to see to their own development.” - Dick Anderson So…………………..

38. So…………..Are you preparing yourself to win the race?

39. Dick Anderson 312.848.2155 rander37@depaul.edu Q & A