As I begin my term as the 2015–2016 chairman of The IIA’s North American Board, it doesn’t seem possible that it has been 32 years since I completed my first internal audit. It was a different world back then. I started my career at a time when all workpapers were completed manually on narrative sheets and columnar pads — red pencil for tic marks, blue pencil for review notes — and audit report drafts were handwritten and left with the audit client’s management until they could be typed by the steno pool back at the office. There was no email, no Google, and facsimile machines were the epitome of high tech.
Although the technology we use to complete our work today has changed dramatically, the foundational skills and attributes of a good internal auditor remain the same: inquisitiveness, persistence, problem solving and analytical ability, interpersonal communications, professional objectivity, and a genuine desire to influence positive change in an entity’s operating and control environment. In retrospect, I consider myself fortunate to have started in an entry-level internal audit position with JCPenney Co., an organization that had a long history of supporting and developing a world-class internal audit function. As I moved through the company’s Pittsburgh, Philadelphia, and Dallas offices, I realized there was a lot to learn, and I was surrounded by knowledgeable, experienced people who were willing to teach me.
Today, as I look to build on the outstanding leadership and vision of my predecessors in the North American chairman’s role, I hope to share what I’ve learned over the years and help internal auditors throughout North America maximize their potential. My theme for the year, “Make Your Mark,” recognizes that internal auditors have a responsibility, and are uniquely positioned, to make their mark in three primary areas: their organizations, their profession, and their communities.
In the Organization
|The IIA North American Board|
The North American Board is charged with overseeing all IIA operations in the U.S., Canada, and Caribbean through providing strategic direction and guidance to Institute staff. These responsibilities include establishing membership rates and approving annual budgets; approving new chapter formations/chapter dissolutions; providing for an extensive volunteer structure to support local, regional, and national IIA activities and training programs; and establishing reporting and control requirements to promote consistency among chapter volunteer leadership.
Early in 2015, the North American Board went through an intensive strategic planning session to ensure that its core purpose and 2015–2020 strategic goals were appropriately aligned with the revised IIA Global Strategic Plan, while focused on the unique needs of the North American membership. In fact, the refinement of our core purpose — to advance the internal audit profession and serve our members — reiterates the Board’s commitment to ensuring that all of our efforts continually provide value to our chapters and our members. The four North American goals that were crafted — Professionalism, Advocacy, Sustainable Value, and IIA as Leader — are being finalized with specific tasks and expected outcomes that members should be seeing and experiencing as part of our messaging and communication outreach efforts over the next several years.
I have been the chief auditor and compliance officer for Blue Cross Blue Shield Association (BCBSA) since 1999. BCBSA is a national federation of 37 independent, community-based and locally operated companies that collectively provide health-care coverage for nearly 105 million members — one in three Americans. My role encompasses several diverse responsibilities. The scope of my internal audit work includes all activities within our Chicago and Washington, D.C. offices. As the compliance officer, I administer our internal employee code of conduct, business ethics training, conflict of interest process, and compliance hotline. In addition, I am responsible for our national anti-fraud department, which provides support to each of the 37 independent BCBSA Special Investigation Units (SIUs) that fight health-care fraud through prevention, detection, and investigation activities. Fortunately, BCBSA also has a long history of promoting a strong control environment and a senior management team that actively supports our internal audit and compliance activities.
In my career, I have observed that those departments that seek to build collaborative relationships with management have the most consistently positive impact on their organizations. For example, we continually identify and foster those relationships that help facilitate review and mitigation of key risks, including those with the finance, IT, human resources, and legal departments. Periodic lunches or meetings with relevant personnel, when there is no specific audit to discuss, go a long way toward establishing long-term rapport. We are unique given the dual accountabilities we have for internal audit and our internal ethics/compliance program. We must be careful to acknowledge and work to lessen the possible blurring of identity between the second and third lines of defense, as well as ensure that our Finance & Audit Committee is comfortable with the objectivity that has been established. I have often spoken about the merits of audit functions building strong relationships with their compliance functions if they are separately organized, as there is a strong mutual benefit to working together to identify risk management opportunities.
That collaborative approach will not be successful, however, without a deliberate and continuous effort to establish the audit function’s credibility, objectivity, and integrity and a mutual focus on the success of the organization. Industry knowledge can be acquired through specialized training and on-the-job experience, but auditors who are respected within their organizations also seek to contribute in other ways. For instance, volunteering for special corporate task forces, employee social events, or charitable initiatives allows the auditor to interact with employees in a nontraditional, nonthreatening environment. The most impactful audit observations often result directly from employees who, based on the rapport and trust previously established by the internal auditor, volunteer information.
Establishing strong rapport and visibility with the audit committee and senior management, as well as reinforcing the professional and standards-driven orientation of the internal audit function, help foster a corporate culture where internal audit is respected and has earned a seat at the table. The ability to proactively identify and prioritize corporate risks, maximize finite audit resources through efficient and innovative audit techniques, and develop value-added recommendations for enhancing operations to help management achieve its objectives are tangible metrics internal auditors can demonstrate to make their mark within their organization. At BCBSA, we build an annual plan as a guide for addressing identified risks; however, we continually adjust that plan as necessary to react to new or emerging risks. Most of these new risks come to us in the form of management requests, which is a good validation that management perceives value from the services we deliver.
In the Profession
I believe one should fully engage in one’s profession, whether it’s a lifetime commitment or a transitional role. The concept of transitional or rotational auditors continues to evolve. There can be a real mutual benefit to dropping a high-potential employee, or an individual with specialized skills, into an audit function for a limited time. However, those individuals still must understand and internalize the basic tenets of the profession — integrity, objectivity, and technical competence. To a great extent, credibility comes from current knowledge and command of the basic skills that define a profession. All internal auditors can make their mark within the profession by embracing and promoting The IIA’s International Professional Practices Framework.
As the expectations of the profession increase and evolve, we should acknowledge our skill gaps and seek out experts to help fill in the blanks. We can join like-minded groups to network and bounce ideas off peers who are experiencing many of the same challenges, regardless of industry or organization. Mentoring is a great way for staff to integrate themselves quickly into an organization, and in turn accelerate their ability to make valuable contributions within those unique organizational cultures. Similarly, networking has proven to be a very efficient way to borrow or adapt specific audit approaches and techniques from others who are willing to share. We can make our mark by training and mentoring others, as we were once coached and helped by the leaders before us.
Becoming involved with The IIA is obviously a great opportunity for internal auditors to get more invested in the profession. I was encouraged to volunteer for the IIA–Dallas Chapter shortly after becoming an IIA Audit Group member in 1989. That first committee assignment has led to an almost unbroken string of committee, officer, and local board roles. I served as the Chicago Chapter president in 2001-2002. I also have served on various international and North American committees and assignments since 2003. The friends I have made along the way continue to be valued resources and mentors. I encourage all members to make their mark through becoming involved with their local IIA activities and helping grow the next generation of audit leaders.
The IIA’s long-standing motto, “Progress Through Sharing,” is achieved when we realize that what we put into a volunteer role comes back to us manyfold in the form of resources, friends, and the support of a network of experts. Often overlooked, however, is the benefit to our own skills when we achieve results in a volunteer role through persuasion, organizational acumen, and the ability to complete tasks through peer motivation, rather than through designated management authority.
In the Community
It is important that internal auditors also make their mark in their communities, as this helps expand the reach and awareness of the profession. Whether through activities for our children, or through our own favorite hobbies or civic causes, we can serve as role models and representatives of the internal audit profession and make our mark by sharing our skills, talents, and enthusiasm in a variety of ways. For many people we encounter, it may be the first time they have ever met or come to personally know an internal auditor, so we need to make those connections count.
Internal auditors have many skills that would be extremely useful in a variety of local community volunteer or charitable groups. Through their financial acumen, ability to suggest reasonable controls, or strategic business sense, internal auditors can help community organizations achieve their objectives more effectively. Internal auditors can give back in many ways. Serving as the treasurer of a private school board taught me more quickly about internal politics, especially when it came to raising tuition rates, than years in a corporate environment alone ever could. These outside activities can help to better prepare us for our corporate roles.
The Year Ahead
In my year as chairman of the North American Board, I plan to work closely with IIA staff, chapter leaders, and individual members to ensure that we are making our mark in the services that we provide. I intend to continue to advocate for the great work and critical role of internal audit professionals. I plan to fully engage our volunteers in helping to implement the new North American Strategic Plan and will work to help our members realize their full potential and make their mark.