Internal auditors face a lot of struggles. Allocation of limited resources, gaining the trust of clients, getting intelligible reports out timely — it is a constantly growing and evolving list. However, one of our biggest struggles is probably the one area where, when we do it right, we can provide the greatest possible value — identifying the true root cause for issues identified during the audit.
I am sure the success in finding root causes varies among audit departments. Some do it well; others, well, not so much.
There was a time when our audit department often found itself in that "not so much" group. We came to recognize this when we realized how often we were accepting corrective actions that effectively said, "Honest, we'll do better next time."
Okay, they didn't say that exactly. The corrective actions were couched in phrases such as "We will emphasize the need to follow procedure" or "A meeting will be held to review the procedures with all employees" or "This requirement has been added to all employees' annual appraisals." But, say it however you want, they were just telling us, "Honest, we'll do better next time."
Any wonder we kept having repeat findings?
We got better. We worked on our critical thinking, we used the five "Whys" more effectively, and we focused on corrective actions that actually helped change behaviors. Repeat findings decreased and it seemed we were making a difference. But, I'm not sure that, except in a relatively small set of instances, we really got to true root causes.
And now I just read something that makes me wonder if any of us have ever really gotten to the actual root cause of an issue.
I'm only halfway through the book The Power of Habit: Why We Do What We Do In life and Business by Charles Duhigg. But, even if the remainder of this book is absolutely worthless (and there is no reason to think that will be the case), It might be impossible for me to overemphasize how much great information this book contains. Buy it; read it. (Probably in that order.)
At one point, Duhigg tells the story of Paul O'Neill. Mr. O'Neill was instrumental in turning Alcoa around in the late 1980s, and that turnaround is an important part of the story that is told. But Duhigg also describes an interesting situation from the 1970s when O'Neill was serving as the deputy director of the Office of Management and Budget in Washington, D.C. He was commissioned by President Johnson to analyze how the government was spending money on health care.
One area he tackled was determining why the U.S. had a higher infant mortality rate than most of Europe and even some parts of South America.
Quoting from The Power of Habit, here is the analysis that was done under O'Neill's direction.
Some research, for instance, suggested that the biggest cause of infant deaths was premature births. And the reason babies were born too early was that mothers suffered from malnourishment during pregnancy … But to stop malnourishment, women had to improve their diet before they became pregnant. Which meant the government had to start educating women about nutrition before they became sexually active. Which meant officials had to create nutrition curriculums inside high schools.
However, when O'Neill began asking how to create those curriculums, he discovered that many high school teachers in rural areas didn't know enough basic biology to teach nutrition. So, the government had to remake how teachers were getting educated in college, and give them a stronger grounding in biology so they could eventually teach nutrition to teenage girls, so those teenagers would eat better before they started having sex, and, eventually, be sufficiently nourished when they had children.
Poor teacher training, the officials working with O'Neill finally figured out, was a root cause of high infant mortality.
Now how is that for an example of digging to find a true root cause? (And, interestingly, it looks like five "Whys" were asked. There may be something to that approach after all.)
I challenge you to name one issue you identified in all your years of audit where you dug to a root cause that was as basically "at the root" as this one.
In fact, I'm serious. I would really like to hear your examples. Please share them.
And, next week, we'll dive deeper into the questions around root cause — including trying to determine if there are a set of root causes that might be applied for any situation.