Evolving Role of An Internal Auditor
Sarika Singh, Head of Group Internal Controls of EFS Facilities Services Group, gives us an insight into the crucial role an internal auditor plays during a business transformation
“Auditor” the word comes from the anglo French’ auditour‘- A listener. It’s surprising how ‘auditor’ a word that started as something so desirable, has come to evoke fear and dread, which raises the anxiety level for management team people. There is a general tendency for people to see internal auditors as cold and impersonal, however, breaking down this stereotype is so important now, that most of the organizations are actively encouraging a culture where the management perceives internal audit as a coach, not a nitpicker.
Organizations today are forced to deal with multiple internal and external challenges. Stringent regulations, compliance requirements, and cut-throat competition have only put more pressure on organizations which bring a high level of uncertainty, adding to the organization’s risk exposure. Organizations need to relook at their approaches and perspectives to be able to manage unavoidable risks in a controlled and effective manner as well as make faster and better business decisions. To obtain such a lens, organizations must focus on being proactive with the ability to look at the near future risks rather than take reactive steps once the damage is done.
Enterprise Risk Management (ERM) is a solution that can bring a sustainability advantage to the organization. It empowers organizations to tackle potential risks by proactively identifying, understanding and managing risk for the sustainable, long-term growth of businesses at large, if implemented effectively.
Changing stakeholders’ expectations and a new paradigm of risk management are prompting an essential shift in the role of internal audit (IA) in many organizations. It has now expanded opportunities for both, its conventional method of auditing as well as leverage its skills in new ways to support the leadership agenda, participation in strategy development, focus on fraud and most importantly determine opportunities for value creation, participation in strategy development and more focus on fraud. Companies must embrace the ERM system for internal audit to move beyond its monitoring role to help influence and improve the management of risks even before they become challenges.
At EFS, the Risk Management Framework is directed towards contributing to organizational goals focused on the Group CEO’s vision “EFS stands for sustainability that is inspired by ‘culture’ embedded in its values, enforced through processes and empowered by technology”. The Group CEO has set the “tone at the top” to ensure adequate support to be extended to the internal audit at all levels within the organization. Each employee in the organization considers risk management as an integral tool of business sustainability. It has been demonstrated through a high-level commitment to integrity, ethical values and compliance, encompassing a “Risk-Informed Culture” within the organization.
Active collaboration between the disciplines of internal audit and enterprise risk management makes a powerful team that can lead to stronger risk mitigation practices in meeting stakeholder expectations. The adage, “the sum is greater than the parts,” certainly applies.
It’s time for internal audit to move beyond just being capable of handling old risks but also be able to align with strategic objectives of the organization and focus on a proactive approach of risk identification. Moreover, integrate ERM to develop a mix of risk and compliance-based audit efforts, augment skills set and get elevated into the role of a more trusted advisor to the business.