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​​​​​Hit the Ground Running

​With internal audit filling many of its open positions from intern pools, a well-designed internship program is a must.​

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​​College interns have become a key source of new employee hiring in Fortune 500 companies, according to Jeffery Selingo, ​author of There Is Life After College. Data from the Collegiate Employment Research Institute at Michigan State University presents compelling evidence supporting Selingo's claim. Based on the Institute's 2015-16 Recruiting Trends, companies with more than 10,000 employees now convert about half of their interns to full-time employees.

The trend in hiring interns and retaining them as full-time employees has impacted many major internal audit departments. Nestlé Purina not only advertises its internship program, but empowers its interns to join the company full-time immediately upon graduation. Interns travel up to 50 percent of the time auditing Nestlé business units in Canada, Mexico, and the U.S., working within operational audit teams of the Nestle Market Audit group. Through this experience, interns "accrue a deep knowledge of the business very quickly," the company reports. As such, interns are viewed as a rich source of new audit talent.

"Internships have changed the dynamic of recruiting on a national scale," says Jon Gonzalez, a recruitment partner for Deloitte. "Most CPA firms are making their intern hiring decisions much earlier in the process to compete for top talent." 

Because employers are increasingly hiring from their intern pools rather than through traditional college campus recruitment, many college career service organizations have had to change their on-campu​s internship recruiting schedules to stay in sync with recruiting practices. For example, the University of Pennsylvania's Career Services moved its internship recruiting from February 2017 to October 2016 to stay in sync with employer recruiting practices. 

Traditional Staffing Sources

Historically, many companies filled their vacant internal audit positions from within the company, selecting employees with broad financial or operational knowledge or with solid management experience. Looking inward to fill open positions stems, in part, from the idea that internal auditors must have experience in the complexities of a company and its processes and procedures to successfully accomplish professional audit work. Indeed, some chief audit executives (CAEs) have recruited existing managers from within their organizations not only for those reasons, but also for their ability to connect, given their background, with client management. 

However, in recent years, internships have increasingly become an important source of internal audit hiring given the technical training that interns receive and the performance capability that they have already demonstrated. Equally as important, skilled interns learn how to interact professionally with the company workforce and client management during their internships. These soft skills vary depending on the industry and corporate culture. But such skills give certain interns a performance advantage, if hired, because they already know the corporate behavior expected. Because of the reduction in hiring risk, the strategy of some firms is to always select internal audit interns with the goal of offering them full-time employment. 

CAE Support

CAEs rarely hesitate to hire an intern whose work performance comports with expectations. Robert Thieling, former executive director of Audit Services at Group Health Cooperative, a large health maintenance organization covering the Pacific Northwest, and new vice president of internal audit for MedImpact Healthcare Systems in San Diego, began an internship program immediately upon assuming his CAE responsibilities at Group Health 11 years ago. "There was not an intern we wouldn't have hired full-time," he says. "Some we lost to CPA firms doing internal audit consulting, but that only proved the value of the program and the quality of our interns." 

Similarly, Expedia has leveraged its internship programs to supplement the company's internal audit team during peak periods, viewing internships as a less costly staffing alternative. Jeff Davis, Expedia's vice president of Corporate Audit Services, is using the company's human resources (HR) department to standardize intern hiring and leverage the other HR disciplines to actualize even more of the internship program's cost-saving benefits. The number of audit interns at Expedia has averaged two to three per year, according to Davis. "Based on the needs of the department, we may offer qualified interns the opportunity to transition to part-time positions for further professional development." 

Scott Howe, vice president and CAE at Costco, also relies on a corporatewide internship program for most intern staffing, though he will hire directly if a prospective intern reaches out to him with a special interest in internal auditing. Since becoming CAE for Costco nine years ago, Howe has hired several interns into permanent positions. 

"If positions had been available, I would have hired more. Overall, one out of every two interns meets my expectations," Howe says, a figure consistent with the industrywide conversion rate of interns to full-time employees. "As a relatively small department of 26 staff members, I have to set high expectations for interns." 

These and other CAEs see internship programs as providing great opportunities for early-career employees to observe many company functions and locations, leading to a thoughtful consideration of different career paths. 

Investment in Interns

Real-world Internships

Goldman Sachs Internal Audit interns shadow and assist audit teams, attend seminars and presentations, and participate in networking events. This experience is designed to provide the intern "with a real sense of what you would be doing day-to-day as a full-time employee," according to the description published in the firm's intern job announcement, indicative of the rationale for such an investment.  

Lithia Motors, which broke into the Fortune 500 at No. 482 in 2015, not only encourages, but prefers, that its internal audit interns join the company as full-time auditors upon graduation, which is stated as an explicit goal of Lithia's internal audit department on the company's website. 

At retailer Nordstrom, all of the interns working on compliance with the U.S. Sarbanes-Oxley Act of 2002 have landed full-time positions at Nordstrom, a major CPA firm, or another Fortune 500 company. Moreover, half of all Nordstrom interns are hired into the company, including internal audit — a figure consistent with Collegiate Employment Research Institute data.

Some internal audit departments may lack the management breadth to support another professional development program. Some CAEs have noted that upwards of one-third of their internal audit staff members are rotational in nature, participating in companywide professional development programs supported by internal audit. While such programs have tremendous potential for developing future corporate leaders, they can also strain the department's infrastructure. To be successful, an internship program requires a significant investment of time.

Brooke Vatheuer, CAE for Alaska Air Group, has taken the planning and organizing of her internship program to a whole new level. "By the time the internship commences, we have planned out their activities for a 12-week period — everything from facility tours to audit assignments to happy hours with other interns and leaders," Vatheuer says. "We recognize that an intern's primary job is to learn, so we build plenty of coaching and development time into their schedule."

One note of caution: Training and indoctrinating internal audit interns may entail substantial cost given their potential lack of professional business experience. Moreover, closer supervision of interns is often necessary to ensure continuity of audit work product quality. Nonethess, many firms have determined that the benefits derived from identifying and hiring talent from their intern pools offset the added indoctrination training and supervision cost, justifying their investment in an internship program.

Best Practices

Many of the CAEs interviewed for this article have taken a traditional approach to managing their intern programs — planning, organizing, controlling, and directing them to a successful outcome. The following key attributes of a well-designed internal audit intern program, including selected outcomes or processes for each management function, originate from a working group of internal audit management professionals who serve on Seattle University's Internal Audit Advisory Board. Companies such as Amazon, Boeing, Expedia, and Nordstrom are represented on the board, along with Deloitte, PricewaterhouseCoopers, and EY.

Planning — preparing job descriptions, program budgets, and a hiring plan and schedule. 

What the intern will do and is expected to accomplish is explained in the job description. Many firms state the goal of their intern program in the description, such as identifying future internal auditors or augmenting existing staff. In either case, it is important to emphasize not just the meaningful nature of the work experience, but the availability of mentors, career guidance, and specialized professional training, such as data analytics or certain program applications. 

To capture the true financial impact of an intern program, most companies prepare an operating budget containing not just the direct costs, but also the indirect costs, including audit supervision and intern training. Predetermined start and end dates for the annual intern program drive the budget. Because it is discretionary, many companies will address it annually based on audit plans and hiring needs.

Working with internal audit management and hiring support organizations — such as HR, recruiting, and leadership and development — helps create a plan and schedule that include enhanced coordination and communication in the hiring process while mitigating the risk of selecting the wrong candidate. 

Organizing — assigning audit management, appointing mentors, and orienting new interns. 

The assigned audit manager must arrange intern work space, training, and building and system access, and remain available on site to give help or serve as a sounding board until the intern is integrated into the organization. To ensure adequate communication, weekly one-on-one meetings between manager and intern are a best practice. Most managers will routinely invite interns to all-team meetings and functions as soon as they are on board. Given the demands of intern management, most companies require the assigned manager to have substantial audit management experience before giving them internship oversight responsibility. 

Mentors provide audit coaching and career guidance. Some companies appoint a mentor within the internal audit department to provide hands-on audit guidance and another mentor outside the department to guide and develop the intern professionally. Often, the latter mentor is at the senior management level.

A formal orientation normally defines company expectations for an internship; identifies internship program management (where to get help); overviews the company business and corporate functions; explains the internal audit organization and its policies/procedures; and emphasizes professional standards for timeliness, customer service, and due diligence. Most companies stress that interns must take responsibility for their own work performance and professional development, so they are encouraged to document their work activity and accomplishments and seek feedback from their immediate management and company mentors.

Controlling — establishing intern work objectives/schedules, performance feedback, and remedial action.

To ensure a positive work experience, audit management establishes intern objectives and sets professional expectations early on as a performance evaluation tool. Most firms permit work schedules to be negotiated during the school year provided that the requirements of the master audit schedule are met. 

Periodic performance reviews typically are conducted based on mutually agreed-to performance criteria, including leadership, ethical, or behavioral principles adopted by the company. Specific feedback is rendered, incorporating the observations of relevant auditors, project managers, and audit client management where appropriate. Most firms summarize strengths and weaknesses of the intern being evaluated, and nearly all identify improvement opportunities.

Remedial action where needed is critical for professional growth. Improvement plans are normally developed consistent with company HR practices and with an eye toward enhancing intern performance as an eventual full-time auditor. 

Directing — assigning intern training and audit projects and communicating and coordinating internship activities.

Intern training generally focuses on audit tools and techniques for data analytics, enterprise resource planning for audits of business functions, and audit sampling for testing a population. Linking the prescribed training to the initial audit assignment is considered a best practice, which prepares interns to hit the ground running. 

Guidelines should be established before assigning audits to interns. Above all, the audit project must be interesting and challenging and provide some fun along the way. Key criteria to consider include the extent of exposure to a variety of company locations, processes, and systems, and whether the audit can be scoped to the intern's employment period while still allowing participation on other audit projects. While their assigned audits are certainly contained in the master audit plan, interns are rarely assigned a project ranked critical on the risk assessment heat map. 

Skills in Demand

Some internal audit departments remain resistant to internships because the educational system has not always taught the skills that internal auditing and similar professions demand. Many colleges and universities today recognize that deficiency and are preparing students for knowledge transfer to the workplace by combining education with relevant work experience. Some schools even offer college credit for internships.

As for internal auditing, some schools administer certificate and post-graduate programs specifically designed to teach students not just internal audit concepts and techniques, but how to apply them to actual audit projects. For example, students enrolled in Seattle University's internal audit program support campus administration by routinely auditing functions such as finance, facilities, HR, and IT as part of the internal audit curriculum. The master audit schedule and project findings are coordinated through the university's chief financial officer and presented to the audit committee of the board of trustees, giving students hands-on audit experience. CAEs willing to undertake the challenge of an internal audit internship program may be pleasantly surprised by students who are well-prepared for the professional challenge. ​

Based on lessons learned from her oversight of internships during the past several years, Mindi Work, vice president of finance for Symetra Financial, offers this advice: "Stretch them, give them real assignments, and let them be a little uncomfortable. They are not there to job shadow. It will truly be a valuable experience if they contribute meaningful work to the audit department." 

Dennis Applegate
Sarah Bee
Dominique Vincenti
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About the Authors



Dennis ApplegateDennis Applegate<p>​Dennis Applegate​, CIA, CPA, CMA, CFE, is an adjunct professor at Seattle University in Washington.<br></p>



Sarah BeeSarah Bee<p>​Sarah Bee, CIA, is director of internal audit programs and a senior instructor at Seattle University. </p>



Dominique VincentiDominique Vincenti<p>​Dominique Vincenti, CIA, CRMA, is vice president, internal audit, at Nordstrom, and chair of the Seattle University Internal Audit Advisory Board. </p>


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