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​The Pursuit of Business Acumen

Audit leaders can help their staff adopt a more business-minded focus and successfully transition from traditional assurance work to advisory and consultative services.​

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​A popular classic comic strip features a dog dragging his owner along on a walk. The owner keeps shouting to the dog, “Heel!” The dog turns his glance to the reader and says, “He’s always saying that! I wonder what it means.”

Internal auditors may feel the same way when they hear the phrase business acumen, which is frequently cited as a prized professional attribute. Today’s internal auditors are expected to bring a wide-ranging and diverse set of skills to the job, but increasingly, traditional accounting and finance expertise are not at the top of the recruiting wish list. Instead, so-called soft skills, including the somewhat nebulous-sounding business acumen, are more commonly cited as must-have qualities. In fact, when asked which skills they were most focused on recruiting for or building in their internal audit functions, a global group of CAE respondents to The IIA’s 2014 Pulse of the Profession Global Report cited business acumen (36 percent) over accounting (28 percent) and finance skills (22 percent). It’s no surprise that internal auditors are expected to be more broadly business minded. Auditors are focusing more of their time and energy on covering business strategy, risk management effectiveness, and governance, although operational and compliance and regulatory audits still command the most attention, according to the Pulse survey.

Meanwhile, the emphasis on purely financial audits continues to follow a downward trend. Survey respondents indicated that financial audits accounted for just 8 percent of their audit plan coverage this year, compared to 14 percent in 2013.

Yet what does business acumen actually entail? Merriam-Webster’s definition of acumen is relatively straightforward: “Keenness and depth of perception, discernment, or discrimination, especially in practical matters.” But how is business acumen specifically exhibited, and what can audit leaders do to help ensure their staff members possess it?

Developing Acumen

Recruiting for Nontraditional Skills

As the internal audit mandate is ever-expanding and requiring more overall business acumen, so is the corresponding hiring profile. When recruiting, audit leaders should look for professionals who possess broad skill sets. Rather than focusing just on technical expertise, hiring managers should keep in mind that a lot of so-called hard skills — such as accounting, audit reporting, and risk analysis — can be taught. They should seek job candidates who are naturally inquisitive, who have excellent interpersonal skills that will allow them to collaborate effectively with other departments, and who can communicate their needs and the value that internal audit brings to the organization.

An IIA/Robert Half report, Succeeding as a 21st Century Auditor: 7 Attributes of Highly Effective Internal Auditors, sought to clarify the underlying dimensions that constitute business acumen. CAEs interviewed for the report suggested it consists essentially of six traits: natural inquisitiveness; persuasiveness; change-management proficiency; service orientation; ability to recognize and respond to diverse thinking styles, learning styles, and cultural qualities; and a global mind-set.

In practice, an internal auditor possessing these qualities would be able to grasp the inner workings of a business quickly, see the opportunities and challenges that exist, and be capable of delivering insights and recommendations that influence action. Whether business acumen can be taught or must be acquired through firsthand experience is open for debate — most likely, it develops in various ways. Across the learning spectrum, internal audit leaders have many tools available to them to help build staff members’ acumen and make a successful transition from a traditional assurance role to that of an assurance and advisory or consultative role.

Career Pathing Internal audit career pathing has benefits beyond engaging employees and developing future plans. It provides audit leaders an opportunity to identify skills staff members need to advance and, perhaps as importantly, the gaps they need to address to reach the next rungs in their careers.
These discussions can also be used to pinpoint where auditors’ business and strategic outlooks are lacking. Audit leaders can then determine specific steps staff members should take — and the resources required — to help build their knowledge.

Training and Development Internal auditors seeking to enhance their business acumen have a wide range of educational opportunities to choose from. They can enroll in courses related to business issues or trends from local universities, engage in executive education classes with colleagues from other industries, take industry-specific courses to learn more about their organization’s business, or pursue continuing professional education credits or certifications.

When staff members attend a training event or seminar, audit leaders should make sure their learning doesn’t end once they leave that location. They should report their findings to the audit group and not only recite what was discussed, but also talk about what the information means to the organization.

Although there are many professional development options, offerings should be customized to the needs of the team. Audit leaders should find out how team members learn best and tailor the program accordingly.

Training strategies don’t need to be expensive. Brown-bag sessions, for example, can be of great value. Anyone on the team who possesses subject-matter expertise in a specific area, such as IT audits or a new regulation, could be invited to impart his or her knowledge to the group. Mentoring relationships within the audit group could be established as well, pairing those who are well-versed in certain business areas with less knowledgeable staff members.

Auditor Rotation Equally valuable as formal education in developing business acumen are opportunities for auditors to rotate into positions within other business units or functions.

By receiving exposure to as many different parts of the business as possible, auditors gain a firsthand perspective on the inner workings and challenges facing different areas of the organization. Although internal auditors always have the ability to peer into these areas, there’s no substitute for the knowledge gained from spending time in the trenches.

Reaching out Across the Organization There are several ways to tap internal contacts beyond auditor rotation arrangements. For example, auditors could be paired with mentors from other parts of the company. Staff members can learn from their colleagues, see how different areas of the organization operate, and broaden their perspectives. As an added benefit, other functions will be exposed to internal audit and the value it provides.

Yet another way for individual internal auditors to enhance business acumen is to continually engage in creative and opportunistic thinking about new ways to add value to the business. For instance, some auditors have found a niche in evaluating major change initiatives, such as IT system implementations, the success of merger and acquisition activities, or the evolution of strategic risks in their organization.

Audit leaders can encourage their group to build intracompany outreach by working on cross-functional project teams and task forces. For example, if the company has a recognition program requiring input from members of different departments, the CAE can make sure internal audit is represented. Or if the organization is testing a new internal social network, a member of the audit team could be asked to volunteer. In the process of participating in these initiatives, the audit team will not only gain insights into other parts of the company, as well as new skills, but they’ll also see how broader business issues, such as employee recognition and collaboration platforms, help the enterprise reach its larger business goals.

Internal audit could also tap the expertise of other corporate executives. The CAE can invite leaders from departments such as IT, marketing, sales, human resources, and public relations to speak to internal audit about their projects and priorities. Key areas of alignment can be identified, such as establishing stronger internal controls and communicating internally about steps different groups can take to ensure compliance. Internal audit can then help determine how to partner with the other departments more effectively.

“Deeper, more meaningful collaboration can help internal auditors address nearly every item on their lengthy priority lists,” Protiviti noted in its 2014 Internal Audit Capabilities and Needs Survey Report. “By developing and sustaining deep and constructive partnerships throughout the business, internal auditors can ensure that their expertise is applied in advance of strategic decisions.”

All of these activities will help staff members build their internal networks. They’ll nurture contacts internal auditors can call with questions or for help.

Networking Networking shouldn’t just be an internal or when-needed activity.  The audit team should be encouraged to connect with and learn from contacts from other companies, industries, and professions. Moreover, involvement with professional organizations such as The IIA should also be supported. Along with the networking benefits, professional development opportunities provided by such groups can help staff members sharpen a broad range of skills, including their bus-iness acumen.

Staying in the Game

It’s no secret that many internal audit functions are still trying to catch up to the profession’s evolution from an assurance-only function to one that provides an extensive menu of assurance and advisory services. After all, it’s not easy to morph into a one-stop consulting shop overnight.

In his InternalAuditor.org blog, “Chambers on the Profession,” IIA President and CEO Richard Chambers discussed the pursuit of professional proficiency: “I don’t believe that every internal auditor has to be an expert on everything, any more than a goalkeeper should be expected to play every position on a football/soccer team. It is incumbent upon each of us, however, to learn as much as we can so that collectively we can field a winning internal audit team for our organizations.”

To their credit, most internal auditors are likely eager to rise to the continually evolving expectations of their stakeholders. But this requires both individual internal auditors and their departments to remain committed to expanding their competencies and further developing sought-after attributes for today’s practitioners, including business acumen.

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