As a young internal auditor, I concentrated on learning technical skills of the profession. I came to appreciate the importance of developing an audit plan at the beginning of every engagement, documenting results of the audit, and crafting a well-written audit report. I also learned how important it was to understand the operation/business of the area I was auditing. These skills served me well throughout my career. However, I can honestly say the technical skills were easy to learn compared with the soft skills I needed to hone to be truly effective.
I have led or served on scores of audit teams focused on an incredible array of industries and operations. I came to realize that, regardless of the function or operation I was auditing, there were common threads in the way people behaved. Overall, the hundreds of professionals over whose areas of operations I audited were good, decent and hard-working individuals. Many had thankless jobs, but they toiled tireless without complaining. Even so, I learned some things about human nature that might be useful for those who are just starting out in their internal audit careers, or for those who are seasoned internal auditors (and want to compare their observations).
Smart People Can Do Dumb Things
It is easy for an internal auditor to be intimidated by the intelligent and highly experienced professionals within an area being audited. They can dazzle you with their deep knowledge and even appear to be unassailable. But some of these bright folks also can do some pretty dumb things. On occasion, I noticed that decisions to violate or circumvent internal controls were made intentionally, based on the belief that their experience or expertise didn’t warrant the kind of controls they were asked to follow. Don’t assume smart people always do smart things. I wrote a blog last year on this topic.
Good People Can Do Bad Things
When we think of fraudulent acts, we often associate them with nefarious characters who intentionally set out to do something bad. However, many of the frauds I discovered or reviewed during my career were committed by otherwise good and decent people who somehow lost their way. They were often under extraordinary financial or personal pressures. They often rationalized their initial actions and didn’t intend for the fraud to morph into something as big as it did. As internal auditors, we should not assume that everyone is doing a bad thing intentionally. But we also must maintain a level of professional skepticism and remember that even good people can go awry. I wrote a blog last year on this topic.
People Like to Be Recognized for Things They Do Well
Internal auditors are trained from the outset that the purpose of our work is to provide assurance on the effectiveness of risk management, internal controls and governance. Yet, we often bolt straight to the findings on inadequate risk management, internal controls, etc. in our final audit report. Many audit reports are crafted with no genuine recognition of management’s accomplishments. That is one of the things that gives us a bad reputation. I have discovered that most people want an objective assessment of their areas of operation. They understand that we have a job to do, but they also seek to be recognized for what they accomplish or do well. Including a section on “management accomplishments” at the beginning of an audit report can go a long way toward generating acceptance of our findings and recommendations for any corrective actions that may follow.
People Don’t Like to Be Surprised
One of the first audits I led taught me a lot about the importance of communicating throughout the process. My team and I were under a lot of pressure to complete the audit quickly. Following the opening meeting with management, we put our heads down and went to work. Four weeks later, we presented the same officials with a draft report. Not surprisingly, they were incensed. They felt they were blindsided by the results. One of them observed that he didn’t disagree with the results, but he sure would have appreciated learning about the problems as we discovered them. In recent years, the importance of open communication throughout an engagement has been stressed in audit standards and guidance. This is important in large part because people don’t like to be surprised.
People Like to Make Themselves Look Good
Most of us hope to be recognized for what we do well. While we may recognize our shortcomings or even failures, we certainly don’t accentuate them when communicating with others. That is important to remember when conducting interviews during an internal audit. People will speak effusively about things that are working well, but they rarely volunteer information about things that are not. This is another reason why professional skepticism is so important for internal auditors. Don’t assume that you have been told “the truth, the whole truth, and nothing but the truth.” Most people naturally like to make themselves look good.
People Resent Being Judged
Internal auditors should remember that, no matter what people say (“we are happy you’re here”), there is almost always anxiety about how the audit will portray their performance or the effectiveness of their operation. We should strive from the outset of an audit to be reassuring and transparent about the nature of our work and the processes we will follow. We should keep them fully and currently informed about the audit’s progress and we should also be open to any feedback about how we are undertaking our responsibilities. No matter how hard you try, don’t be surprised if there is tension at the end of an audit. Most people simply don’t like to be judged.
That is my short list of things I learned about human nature in the workplace over my career as an internal auditor. What have I missed? Drop me a note at email@example.com.