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​Update: The Intelligent Automation Barrier

Lack of clear strategy inhibits adoption of audit technology.

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​More than one-third of internal audit executives surveyed by Deloitte say lack of a clear strategy is the biggest challenge to adopting intelligent automation as part of their operations. It is a finding that runs counter to the commonly held belief that lack of access to data and of technology-enabled tools are the big roadblocks, says Sarah Fedele, Deloitte Risk & Financial Advisory's U.S. internal audit leader, based in Houston.

Nevertheless, digital transformation of an internal audit function takes a holistic strategy, she says. That holistic strategy needs to consider factors such as organizational culture, leadership mindset, and IT skills, as well as technological tools and architecture.

Only 8% of respondents say they currently use intelligent automation, according to the survey of more than 250 audit executives during a March webcast. Another 39% say they plan to begin using intelligent automation sometime after March 2022. Those findings parallel the extent that their organizations have adopted these technologies.

Among other findings, Fedele says she was struck that 19% of executives say they do not use intelligent automation for internal audit nor have plans to do so. Given the increased demands on internal audit for greater assurance and better advisory services, "you'd think intelligent automation would be a fairly critical component of those efforts," Fedele says. It has benefits as a quick win and from a strategic perspective, she adds.

The audit executives surveyed recognize the need to monitor automation at the enterprise level because the technology is not foolproof. More than half (52%) report they plan to increase their use of such technologies as artificial intelligence, machine learning, and robotic process automation to test how intelligent automation is used enterprisewide. G. Nordhoff

Forced Labor in Supply Chain

Worsening labor practices fuel supply chain risk.

A combination of tighter governmental scrutiny and an uptick in forced labor globally could create more supply chain risk for businesses. For instance, a new study from the University of Sheffield in the U.K. found that garment workers in Ethiopia, Honduras, India, and Myanmar are at increased risk of forced labor due to the pandemic.

Risk factors the 1,140 respondents experienced include wage declines, increasing indebtedness, worsening conditions of verbal abuse, and threats or intimidation, according to The Unequal Impacts of COVID-19 on Global Garment Supply Chains study. The number of child laborers has risen to 160 million, the first increase in 20 years, according to an International Labour Organization and UNICEF report, Child Labour: Global Estimates 2020, Trends, and the Road Forward.

Meanwhile, U.S. Customs and Border Protection (CBP) has stepped up enforcement efforts related to goods made with forced labor. Between 2020 and 2021, the U.S. issued withhold release orders on apparel, consumer goods, electronics, pharmaceuticals, tomato and cotton products, palm oil, silica-based products, and seafood. In March, the CBP seized latex gloves at the Port of Kansas City, Mo., after it received evidence that the producer had engaged in forced labor practices. "CBP will not tolerate forced labor in U.S. supply chains," says Port Director Steven Ellis. C. Janesko

Workplace Culture and Well-being

Culture is essential to employee mental health and hybrid work success.

As the world continues to emerge from the COVID-19 pandemic, workers are reporting high levels of burnout and "negative emotions," defined as "worry, stress, anger, and sadness," according to Gallup's State of the Global Workplace 2021 Report. The advisory firm says reversing this trend requires creating inspiring workplace cultures that maximize employee potential and well-being. The report derives its data from Gallup World Poll surveys and interviews of nationally representative samples of adults in more than 116 countries.

Gallup acknowledges record levels of negative emotions globally in 2020, with roughly seven in 10 employees identifying as "struggling" or "suffering" rather than "thriving" in their overall lives. Yet, the firm points out that negative emotions have been increasing over the past decade in parallel with a decline in global gross domestic product (GDP) per capita. Gallup says that 80% of employees are disengaged from work, resulting in a loss of 10% of global GDP, or $8.1 trillion, annually from the global economy.

There may be a link between the increase in negative employee emotions and declining economic dynamism and innovation. "Successful corporations of the future not only will generate profits, but also will generate thriving employees who are capable of weathering crises," Gallup advises.

Additionally, recent research by Gartner suggests that organizations must apply radically flexible, or "composable," thinking to more quickly and effectively adapt to shifting employee needs and expectations. In a recent e-book, C-suite: 7 Myths Standing Between You and the Hybrid Future of Work, the research firm posits that businesses should be "made up of interchangeable building blocks that can scale up or down or swap out." Gartner maintains that existing remote work strategies should be replaced by deliberate, innovative hybrid workforce approaches that tackle three key issues: 1) evidencing tangible economic benefits, 2) investing in the employee experience, and 3) supporting the workforce operating in a hybrid model. L. Nelson

Reckoning for Abusive Bosses

Bullying employees can negatively impact productivity and well-being, says David Yamada, director of the New Workplace Institute at Suffolk University Law School.

Broadway producer Scott Rudin recently resigned from his productions amid allegations of physical and verbal abuse of employees. What impacts can workplace bullying have on employees and organizations? 

The Scott Rudin story offers a prominent example of how workplace bullying can be so destructive. It's premature to say whether it will become a so-called poster case of horrific, toxic worker abuse, but it certainly qualifies as a leading candidate.

Workplace bullying is the classic lose-lose scenario. Negative impacts on employees include stress-related physical and psychological impairments, symptoms consistent with post-traumatic stress disorder, and even suicidal ideation. These impacts often affect job performance and relationships with co-workers, family members, and friends. Obviously, the effects on one's livelihood and vocation can be significant.

Negative impacts on organizations include reduced productivity from bullied workers and bystanders, lower morale, and higher absenteeism and attrition. Negative reviews on third-party social media sites can impact applicant flow. In especially toxic situations, negative media coverage may enter the picture.

For internal audits, what are the indicators of an abusive leader or workplace and what types of controls should organizations have in place? 

Internal audits that incorporate climate surveys and 360 feedback need to distinguish between incivility and abuse. The former is bad, but the latter can be devastating. Productivity, morale, absenteeism, and attrition indicators concentrated in certain departments, working groups, etc., may serve as indirect signs that bullying behaviors are part of the mix.

Some employers have added workplace bullying or generic abuse to policies and training that cover and prohibit sexual harassment and forms of illegal discrimination. Of course, such policies are effective only if taken seriously by organizational leadership. Above all, top-level leadership treating workers with dignity and practicing the old-fashioned Golden Rule trickles down in positive ways.

Tips for Energized Meetings

Simple strategies can boost meeting productivity.

Internal auditors are familiar with the traditional flow of business meetings — a few minutes of spirited small talk before getting down to business. That's typically the time when energy levels plummet.

The key to keeping the energy of meetings going beyond those first five minutes is giving the meetings focus, says author Elizabeth Doty in a recent PwC Strategy+Business article. That in turn provides participants something to direct their ideas toward.

For example, leaders should choose a prompt that will help focus the discussion, says Doty, former lab fellow at Harvard University's Edmond J. Safra Center for Ethics. "Usually framed as a question," she says, "a strong prompt is specific enough that people can respond without too much effort, and broad enough to invite diverse views and new thinking."

Doty also recommends choosing an effective stimulus that provides context, orients participants toward the task, and adds new elements to their thinking. L. Wamsley

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