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​Don't Just Measure It, Do Something!

Auditors should make sure they’re measuring the right things — and using results the right way.

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​How do you measure the success of your internal audit department? The subject comes up repeatedly in conferences, articles, research, and chapter meetings. It is obviously an issue that plagues and perplexes audit departments everywhere, and finding the answer seems to be a holy grail quest for the profession.

The challenge certainly doesn’t come from a lack of possibilities. Everything from audits completed to use of available audit hours to requests for audits to customer satisfaction to corrective actions completed to efficiency improvements identified to certifications achieved to the number of auditors who can dance on the head of a pin have been suggested, adopted, and rejected. But we all continue to search for internal audit’s success-measurement El Dorado. 

The reason our search continues to fail, even with this unending supply of possibilities, is that audit departments forget two important rules pertaining to the development of success measures. Rule No. 1: The measures should be developed in support of the audit department’s mission. If the department cannot demonstrate how the measures support that mission, then they become vanity measures serving no purpose other than saying, “Look at us!” Note also the assumptions built into this rule — internal audit has a mission statement, that mission is in alignment with the organization’s mission, and every auditor knows and can recite the mission statement. Missing any of these elements results in ineffective measures.

However, most important is rule No. 2: At the end of the day, have a plan for how all those measures will be used. Author and marketing guru Seth Godin once stated, “Don’t measure anything unless the data helps you make a better decision or change your actions.” And unless an audit department uses its measures to improve internal audit’s choices, do better work, or make the department more effective, then collecting the associated data is just a waste of resources, time, and effort. 

Many audit functions measure, but I have seen very few that use those measures to get better. At most, if they are not meeting the criteria promised to the audit committee, there will be much wailing and gnashing of teeth as the chief audit executive promises improvements. Then the failures are merely used as a blunt instrument to bludgeon members of the audit department into doing better. 

Internal audit functions rarely analyze their shortfalls against success measures to determine the root cause. Too often their response is a simple, “We didn’t meet the measures of success this year so, honest, we’ll work harder next time.” This is a response we wouldn’t accept from a client, and one we cannot accept from ourselves.

Make sure you are measuring the right things. Make sure you are meticulously ensuring the credibility of the resulting data. And then make sure you are using the results to effect positive change. 

Mike Jacka
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About the Author

 

 

Mike JackaMike Jacka<p>​​​​​​​​​​​Mike Jacka, CIA, CPA, CPCU, CLU, worked in internal audit for nearly 30 years at Farmers Insurance Group. He is currently co-founder and chief creative pilot for Flying Pig Audit, Consulting, and Training Services (FPACTS). In <a href="/_layouts/15/FIXUPREDIRECT.ASPX?WebId=85b83afb-e83f-45b9-8ef5-505e3b5d1501&TermSetId=2a58f91d-9a68-446d-bcc3-92c79740a123&TermId=ac8af301-e15c-49bc-9c04-b97c2e183a4b">From the Mind of Jacka​</a>, Mike offers his wit and wisdom on the internal audit profession.</p>https://iaonline.theiia.org/mike-jacka

 

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