logo-newlogo-newlogo-newlogo-new
  • Home
  • Blog
  • Audit Trail Academy
  • Advisory Services
  • Books
✕
  • Home
  • Chambers on Internal Audit
  • Uncategorized
  • Beyond Cost Savings: Defining the Big-impact Audit

Beyond Cost Savings: Defining the Big-impact Audit

The Hunger for Risk Appetite
July 28, 2011
Generating a Big Impact With a Small Audit Staff – Part I
September 2, 2011
August 18, 2011

Whether it’s in internal auditing or in life in general, we all aspire to make a difference. We want that feeling of accomplishment that comes with knowing we have changed the world, if even in a sm​all way. But internal auditing is especially rewarding when we can make a big impact — when we bring about major changes that improve operations and cause senior management and the board to sit up and take notice.

So what’s a big impact in internal auditing? Obviously, “big impact” often equates to “big dollars.” Any auditor would be proud of a report showing that a contractor had overcharged his or her organization by tens of millions of dollars — or, better yet, that a full $300 million could be saved merely by delaying a proposed expansion initiative.

There’s no doubt that big-money audits command the immediate attention of management and the board, but sometimes the audits that make the biggest impact are not the ones that result in enhanced cash flow. Even during a global financial crisis, we need to remember that internal auditing extends well beyond financial audit, and internal audit reports can generate immediate, significant, and enduring results in other ways.

Often big-impact audits are focused on issues that are highly material, enterprise wide, related to health and safety of individuals, or potentially highly visible/sensitive. Big-impact audits are the engagements that bring about significant changes. For example, an audit that identifies grossly inadequate physical security policies could be expected to have a major impact regardless of any potential financial impact.

Big-impact audits also tend to have immediate results. Too often, internal audit engagements are slow to generate impact. But consider the effect of performing an information security audit that identifies serious weaknesses in firewalls, or an audit that unearths substantial noncompliance with an important regulation. These engagements may or may not have a substantial financial impact, but the results would be both immediate and significant.

The effects of high-impact audits can endure long after the end of the report. Imagine, for example, a report demonstrating that, based on financial risks, reputation risks, operational issues, or other factors, a proposed merger/acquisition strategy is not in the best interest of your company. The organization might literally be transformed or saved because of a single well-documented audit finding.

In general, big-impact audits have an enterprise wide impact. Many audits focus on isolated or limited problems. We need to avoid unnecessary “scope creep,” but we should also keep in mind that, the broader the audit scope, the bigger the potential impact. For example, a company wide audit that identifies inadequate contract administration usually will have more impact than one that identifies construction contract problems in a single department.

Audits of high-visibility or high-sensitivity issues often generate high impact. This is particularly true in the government sector, where audit reports are often brought to the public’s attention. The impact is immediate and significant when an audit discloses that agency officials are abusing official funds for personal use, but in the public sector, as elsewhere, financial results are not the only issue. A few years ago, global publicity resulted from a finding that government employees were using their work computers for the SETI@home project, a scientific experiment that uses Internet cooperation to search for extraterrestrial intelligence. And we can all imagine the headlines when a government audit discloses consistent, agency-wide lack of adherence to legislation such as the U.S. Fair Labor Standards Act.

Another fertile area for big-impact auditing is the audit of health or safety issues. Such audits do not have to be broad or extensive. For example, auditing a facility renovation plan might disclose that the plan does not ensure adequate asbestos abatement. Lives might be saved if an audit finds that a lineman training program does not adequately convey principles of grounding.

One approach of identifying big-impact audits is to consider the attributes our stakeholders value. Every organization’s stakeholders are unique, but they almost always appreciate practical recommendations that enhance the bottom line by increasing revenues, holding down costs, or mitigating key risks. Audit customers also value audits that unearth significant new risks or that respond to their specific requests.

Any audit is more likely to have a big impact if we have the basics in place. For example, we are more likely to get results if our audit reports are succinct and timely, and if they show balanced results based on continuously objective auditing. When we are regarded as trustworthy and fair, our reports are more likely to carry weight. By building strong relationships with management, we are helping to ensure that our recommendations are given serious consideration. The result? Most types of engagement can have a big impact under the right circumstances.

Despite the wide variety of engagements that can make a big impact, it is all too common to hear comments such as, “Internal audit never really changes anything at my organization,” or, “Our audit department is so small we can’t really make a difference.” I believe that these statements never have to be true.

In internal auditing, as in life in general, you don’t have to be big to make a difference. Regardless of the size or positioning of internal auditing within an organization, we can have a big impact. In my next blog, I will outline five specific strategies for making a bigger impact with internal auditing — strategies that can be used successfully even by the smallest internal audit shops.

Share

Related posts

March 13, 2023

New IIA Report Is a Timely Benchmarking Resource for Internal Auditors


Read more
May 16, 2022

THE STAGGERING TOLL OF COVID RELIEF FRAUD: WHERE WERE THE THREE LINES?


Read more
February 3, 2022

To Live a Life in Color, You May Have to Change Channels


Read more

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What’s Trending

03-20-23

New Report Reveals Surprising Insights from Internal Audit Executives


03-13-23

New IIA Report Is a Timely Benchmarking Resource for Internal Auditors


03-02-23

6 Things Audit Committee Members Often Won’t Say to Internal Audit


Read More

Archive

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009

Contact Us

PO Box 1441
New Smyrna Beach, FL 32170

+1-407-463-9389
rchambers@richardchambers.com

About AuditBeacon.com

AuditBeacon.com is a resource center for internal auditors and risk professionals from around the world. In addition to more than 500 blogs authored by Richard Chambers, the site includes links to news and insights on internal audit and other information that illuminates the value of this important profession. AuditBeacon.com is provided as a service by Richard F. Chambers and Associates, LLC.

Copyright © 2023 Richard F. Chambers & Associates. All Rights Reserved.
  • Home
  • Blog
  • Audit Trail Academy
  • Advisory Services
  • Books