I previously wrote about Lord Smith's speech at the International Conference in Kuala Lumpur (see here). He has now been interviewed by the IIA–UK and Ireland (the Chartered Institute of Internal Auditors), and I highly recommend the resulting article.
What are the highlights for you?
For me, its the emphasis to go beyond "understanding the business," which many experienced auditors would emphasize. He stresses the need to understand what drives leaders of the organization:
"Get under the skin of a business — to understand leadership behaviour and the cultural issues and incentives that drive its operations and strategy."
He continues with:
"In order to move to the next level, we need more attention on behaviour and culture. That needn’t be at the expense of process, but we all know that ticking boxes in the run-up to 2008 didn’t help the banks. We need to move incrementally towards a clear understanding of the underlying motivations that drive projects and transactions."
Do you understand the risk of inappropriate executive behavior? Is it part of how you devise the audit plan?