Today’s audit committees expect more from their chief audit executives than ever before, and financial and business acumen are no longer sufficient, according to a new report.
A recent whitepaper from the Institute of Internal Auditors’ Audit Executive Center and Korn/Ferry International found that establishing and maintaining strong relationships with key stakeholders is a critical component of success for chief audit executives to lead their organizations’ internal audit function. The whitepaper, “The Relationship Advantage: Maximizing Chief Audit Executive Success,” describes this skill as “relationship acumen” and stresses it is key to an internal audit leader’s ongoing success.
“Traditionally, internal auditors have not been widely recognized as possessing these ‘soft skills,’” said IIA president and CEO Richard Chambers, who co-authored the whitepaper. “But they are essential to effectively navigating the often rough waters internal auditors must confront. After all, the news they must deliver is not always good.”
According to the report, internal auditing’s top stakeholders—executive management and the audit committee of the board of directors (who might seemingly have conflicting agendas)—are increasingly demanding that the CAE be effective by partnering with management when providing both consulting and assurance advisory services. These sometimes conflicting expectations require a broad range of communication skills and sensitivities.
“Business and financial acumen alone are no longer enough,” said Charles Eldridge, a senior client partner in Korn/Ferry International’s Financial Officers Center of Expertise, who co-authored the whitepaper. “Many of the CAEs we interviewed emphasized the importance of building strong relationships with all stakeholders. Today’s increasingly complex business environment requires the ability to navigate varying needs and agendas. CAEs are increasingly required to observe, absorb, probe and listen. They also recognize the need for developing even stronger ties to key audiences – from senior managers to audit committees.”
The whitepaper also describes six attributes that are a must for top CAEs: (1) positive intent, (2) diplomacy, (3) prescience, (4) trustworthiness, (5) leadership and (6) empathy. While widely perceived as strong traits of any well-performing leader, they are also cited as keys to the success of those responsible for leading the internal audit activity.
According to the whitepaper, today’s audit committees expect more from their CAEs than ever before. They want the CAE to be a confident and invaluable leader—a conduit to the organization. They must be proactive and get out in front of the curve, while avoiding the creation of a punitive image. They should advocate behavioral change with a positive perspective, and work toward improved customer satisfaction.
The report emphasizes that relationship-building is an ongoing, dynamic process that must be continually nurtured with commitment and energy.
“Successful CAEs recognize the signs of change and recalibrate,” said the report. Finally, the white paper emphasizes the important role that trust plays in every aspect of an internal auditor’s work. As one CAE put it, “No one will tell you the truth unless they trust and value you.”
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