Having been on the other side of the (audit) table and in business leadership roles, I know that my limited resources must buy the optimal mix of people, process, and technology to exceed — not meet — my objectives. When objectives are not being met, or indicators seem to be pointing that way, I want to understand why, why, why, why, why. For it is only the root cause that one can fix.
Many times I see audit findings that are really more the symptom — meaning what we are seeing — and not the root cause. More relevant and valuable findings focus instead on the actual problem or opportunity, with recommendations that focus on what we can fix.
For example, I remember a finding that stated that two of 20 purchase orders were not approved properly and the recommendation was to ensure that all purchase orders are approved properly. Of course, the questions would be:
- Why were these purchase orders not approved and how do we fix that?
- Was it the process or the policy?
- Did people not know what to do?
- Did people not want to do what they are supposed to do?
Once I know why, then I can fix that.
A Six Sigma mindset can help auditors develop more valuable, relevant findings. I have had a few Six Sigma-trained or certified persons on my audit teams, and for the most part, they are some of the best auditors because they want to know why and how we can do better.
Internal audit, by definition, is designed to add value and improve operations to help our organizations meet, if not exceed, objectives. Six Sigma strives to eliminate defects and waste by improving processes to help the organization meet, if not exceed, objectives.
What I like about Six Sigma, and its belts, is that the focus is on the root cause. It deploys various techniques to find reasons for defects and waste, and it takes one through a systematic and disciplined approach (sound familiar?) to get there.
At the heart is Six Sigma's define, measure, analyze, improve, and control (DMAIC) cycle, which starts with defining the problem, finds the root cause in the middle, and ends with controlling the new, improved process (sound familiar again?). Also commonly used (in internal audit, as well) is the 5 Why approach to get to the real problem. Asking why too many times can be annoying, but just when you think you have the answer, ask why one more time.
Other techniques such as scatter plots, fishbone diagrams, and 5S visual management also can be effective in helping auditors discover the true reason why they are seeing the symptoms they want to change.
The finding is not the resulting symptom that we are seeing. The valuable, relevant finding that one can fix is the reason — the cause — why we are seeing what we are seeing. Consider Six Sigma techniques to find those underlying reasons.
Timothy J. Berichon, CIA, QIAL, CPA, is director, Global Advocacy, at The IIA.
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