Internal Auditors as change agents: What a difference a year makes!

Thank you, dear Dan Swanson (Managing Editor at EDPACS, part of Taylor & Francis Group ) for the invite and the opportunity. Our co-authored paper was just published, on 15 May 2024:

Lenz, R., Karmann, O., and Druckenmueller, J. (2024), Internal Auditors as change agents: What a difference a year makes! EDPACS, https://doi.org/10.1080/07366981.2024.2348283

?

Prologue 2024

Murdock (2024) beautifully delivers internal audit content via storytelling: the transformative journey from an underperform[1]ing Internal Audit Function (IAF) to a value adding, and respected service in the eyes of key stakeholders. There is much to learn from the fictitious “John Taylor” and his audit trail. There are many “John Taylor like IAF” out there in the real world. This story is about me, about “Rainer Lenz,” this story tells about my real-life experience. This article originally written in September 2015 describes my first-year journey and reflections as Chief Internal Auditor, after assuming the role as Head of Internal Audit at Villeroy & Boch in May 2014. “To better under[1]stand the plurality in practice, we need to study the practice” (Lenz, 2013, p. 286). This is good advice, however, we hardly get insights into the real life of Internal Audit Functions for IAFs are literally INTERNAL. This article is a case-study. My first assignment as Chief Internal Auditor lasted from 2007 to 2013. This is about my second assignment as Chief Internal Auditor, commencing 2014, and it is about my first year in the role. I view myself as a change agent, and this article underlines that one year can make a tremendous difference. If I can be a change agent, the encouraging message is that all Internal Auditors can be change agents. I am grateful to my coauthors, both part of my small IAF at Villeroy & Boch Group.

?

Abstract

It was evidenced in a multiple-case study that the pattern of interaction between Chief Audit Executives and Senior Management is a key determinant of Internal Audit effectiveness. There are notable differences among Internal Audit Functions. The effectiveness of Internal Audit is largely determined by “soft factors.” Therefore, where Senior Management, possibly pushed by the supervisory board or the owner himself, truly supports the Internal Audit Function and wants it to look at the right matters, its effectiveness will be fundamentally different from cases where the management and/or board is passive, and does not push the Internal Audit Function to become effective by unearthing matters they may not wish to be found. In the upper echelon of Management, interaction with the chief stakeholder/s typically happens frequently, in a timely manner, and the communication is geared toward problem-solving. The relationship is strongly based on shared goals, shared knowledge, and mutual respect. At the other end of this spectrum, interaction with the chief stakeholder/s happens in[1]frequently, is typically delayed, and the communication is rather geared toward finger-pointing. In this context, functional goals prevail, knowledge is preferably exclusive, and relations can be impaired by disrespect. This article provides conceptual and practical insights into features within the more immediate control of the Chief Audit Executives, helping or hindering Internal Audit effectiveness. Self-perception and external perception can differ greatly. Positioning and communication are instrumental when identifying successful Internal Audit Functions; these make a fundamental difference as to whether the Internal Audit Function is positioned as police, servant, consultant, doctor or change agent. Practical insights then demonstrate what a difference a year makes. Guided by the change agent, the more effective Internal Audit Function can prove also with hard data that there are fewer overdue findings, that reports are delivered more swiftly, and quantum leaps of productivity can be achieved.

?

I thank my co-authors for the joint journey. #StrongerTogether

The authors thank David Hill , CEO at SWAP Internal Audit Services (https://lnkd.in/epKMW3X4 ), for funding OPEN ACCESS.

#internalaudit #effectiveness #changeagent Oliver Karmann Jens Druckenmueller, LL.M. Villeroy & Boch