Many Internal Audit Failures Stem from Misalignment with the Company Strategy
We’ve all heard the many clichéd ways to describe when multiple components are aligned in their goals or strategy: “We’re all in this together,” “we’re on the same page,” “we are singing from the same hymnbook,” “we’re operating on the same wavelength,” “we’re in lockstep,” “we’re rowing in the same direction.” And there are plenty more.
The reason there are so many clever ways to say the same thing is that achieving alignment in a common goal is critical to the success of any group endeavor. Even one person marching to the beat of a different drummer can threaten the success of the entire group. This dynamic plays out in all facets of business activity and we’ve seen countless examples of when a person or group causes problems when they have different objectives or are not in alignment with the larger group.
Misalignment between internal audit and the enterprise-wide strategy and line-of business priorities can lead to problems. I would argue that it is this misalignment that is at the root of many recent company blunders that have resulted in costly and embarrassing public scandals and reputational damage. When internal audit or other assurance functions have different goals and incentives than those of the business units or other functions, disaster is often not far behind. (Article includes 8 causes of misalignment between internal audit and business units on company strategy.)
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Chief Executive Officer
6 年As a leader implementing various Enterprise-Wide financial systems, I've witnessed very similar misalignment, etc. I'll undoubtedly share much of the content of this article with my current and future customers!!! Thank You!
Sr. Risk Manager | Amazon
6 年Great read Jonathan. I’ve seen this happen first hand within client organizations in the federal space. Specifically for federal agencies, my thoughts are that traditional internal audit functions were focused primarily on the financial side versus looking at cross cutting operations which are driven by strategy. I wonder whether realignment of the internal audit function from the Comptroller/CFO shop to the front office/COO would help alleviate some of this misalignment.
it is a very good article and tackles points and issues that never get completely resolved. Businesses are dynamic and IA is normally "behind the curve". I lived several experiences to this effect, most notably in France... many years ago, when Marketing and Production and Inventory Planning were not in Sync and IA had to highlight the problem. Incorrect decisions were made based on poor marketing assessments ... IA detected the problem and quantified the loss resulting from this particular issue. To do so... IA had to be aligned with the business objectives and decisions of the Parent Co.
Internal Audit | Risk Management | Control Management
6 年Thanks Francis. Good communications skills are critical towards engaging stakeholders from the planning stage to executing and reporting on audits. That allows Internal Audit to create value by addressing issues of importance to the stakeholders/LOB’s. Could misalignment begin from poor planning and communications when LOB leads do not see any value in work performed by Internal Audit ?