Most organizations are still unhappy with the performance of their external auditor’s reliance on management’s work product for SOX 404. A recent 2013 Protiviti SOX 404 survey reveals 37% of the participants are unhappy with their external auditor’s performance when it comes to their reliance on their SOX 404 work. One solution to this problem is getting more creative and innovative. According to Mike Jacka, President and Co-Founder and Chief Creative Pilot of Flying Pig Audit and well known International IIA Speaker, “asking the right questions” gets better results. These better results achieve the right audit approach for the organization. Jacka believes that Internal Audit departments need to be innovative and creative when dealing with their internal clients, or as some call them key stakeholders.
Mike suggests, “If you understand the risk and the area, you’ll know how to do the audit.”
The new COSO Framework is not revolutionary, it’s evolutionary.”
More importantly how can the internal auditing group be creative when it’s not a one-time big project? Mike recommendations:
1. Don’t sit back and wait for the answers.
2. Look into the future and look for something new. Recognize that we there might be a specific need, but also realize there is a much bigger picture.
3. Look for something new to do and try to discover a new approach.
Instead of asking “How do I audit?” This is a time for the audit group to talk with the executives about the bigger picture that the New COSO Framework represents.
What may be overlooked by internal auditors?
1. Don’t just focus on control activities and monitoring activities. Risk Assessment and Monitoring Activities are very important. Be sure you are monitoring
the entire framework.
2. It’s more important to monitor the control environment from a broader perspective, not just financial reporting.
3. Don’t just look at the 5 components of COSO.
4. Look at the control environment (which ties into ethics), in doing so, you can add much more value by looking at the broader risk and broader potential problems.
5. This is the time to speak with the executive about matters they have not considered.
Final Word for Internal Auditors
Look at the bigger picture, get your executives involved and ask the right questions BEFORE doing the audit.
About Mike Jacka
Mike Jacka is a speaker, trainer, author, and internal auditor who, upon retiring from a 30-year career in internal audit with Farmers Insurance, became Chief Creative Pilot for Flying Pig Auditing, Consulting, and Training Solutions (FPACTS). An award-winning columnist, he is known for his work with Internal Auditor magazine including the blog “From the Mind of Mike Jacka” and the magazine’s lighter side pieces such as “Alice in Auditland”, “Auditing Songs for the Holidays”, and "Auditors Anonymous". He speaks on a wide ranging variety of topics including such areas as social media, reputation risk, creativity, and leadership. He is co-author of Business Process Mapping: Improving Customer Satisfaction (now in its second edition), Auditing Social Media: A Governance and Risk Guide, and The Marketing Strategy: A Risk and Governance Guide to Building a Brand. His latest book will be published in 2014, a collection of humor pieces titled Auditing Humor and Other Oxymorons.