By Richard Chambers | June 14, 2021
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I recently heard from an old acquaintance that I had worked with as an internal audit colleague years ago. He eventually moved on, and today holds C-suite assignment in a large company. He reached out to me because he had just received an internal audit report on his area of responsibilities that included a number of critical findings. He wasn’t contacting me about the substance of the report (some of with which he strongly disagreed). Instead, he was lamenting that the audit had taken three years to complete. Yes – 3 years! Yes – 36 months! Yes – 1,095 days! He knew my reaction before he even asked.
I realize that some of the delay in completing that internal audit was due to Covid-19. A lot of internal audit departments struggled with timely audits during the pandemic. However, as I shared in a blog last year, audit reports need to be even timelier during periods of extraordinary disruption. However, even if the internal audit department was shut down completely for the past 18 months, the audit still took far too long.
During his diatribe over the late audit report, my colleague pointed out several pitfalls from the audit that are true all too often when audits take too long. First, he observed that some of the audit results are out of date – portions of the audit addressed controls and operations pre-Covid that bear no resemblance to mid-2021. Second, he pointed out that some of the conditions could have been corrected far earlier if he had been given a copy or briefed on the draft findings. He concluded by observing that the final report was of virtually “no value” to the organization. I couldn’t disagree since the client is usually in the best position to make that assessment.
I realize that this is an extraordinary case. Very few internal audits ever drag on for more than a year. But far too many internal audits are not timely. Even an audit that takes three months (less than 10 percent of time that audit took) is really not timely in the eyes of many of internal audit’s stakeholders/clients. I once had a client who looked me straight in the eye and said, “I need your audit results in time to make a difference.” Late reports, he observed, were of little or no use. I felt that was a harsh assessment, but understood his point.
Over the years, I have come to agree with the great playwright George Bernard Shaw who once observed, “Better never than late.”
I have been an evangelist about the need for timely audits for almost three decades. I have written countless blogs on the topic, and even dedicated three chapter in my book The Speed of Risk, on how internal audits can be timelier. There is much that can be done to achieve more efficiency in planning and conducting the audit, but it is often the process of writing and editing the final report that is the biggest culprit.
The iconic Larry Sawyer once observed that “few sources of friction within the audit department exceed that caused by the process of report writing.” Sawyer went on to correctly observe, “The most brilliant of analyses and the most productive of audit findings seem to be forgotten during the trauma of report writing.” In my view, these are some of the wisest comments Sawyer (or any other practitioner or academic) ever uttered about internal auditing.
After more than 45 years in the internal audit profession, I am not sure that we are any more proficient in publishing timely and well-written audit reports than we were the day I first “donned my internal audit spurs.” As Sawyer noted, the reasons for committing “reportable offenses” are many:
The speed at which risks are emerging and destroying organizational value in the 2020s dictate that internal auditors should have zero tolerance for slow reporting processes. Delivering an outdated final report after like the case I cited earlier is not an option. That’s not even protecting organizational value, much less enhancing it.
So, once again, I want to share the advice for more timely report results? I boil it down to four critical strategies.
I could write on about the timeliness of internal audits, but that wouldn’t be a good use of our time. I hope some of my ideas are helpful as you ponder the future of your audit processes.
As always, I look forward to your thoughts.
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I welcome your comments via LinkedIn or Twitter (@rfchambers).