What can go right? Thinking outside of the auditor box

One of the enduring lessons from my time at Ernst and Young is an outcome of the audit methodology of financial statement auditing. The first question that became the primary question that provided basis for any audit action was the proverbial ‘what can go wrong?’ All audit action and re-action succeeded from this question. 

In my current role as an internal auditor, I have carried this question with me to industry like a close friend. Like a loaded weapon in my audit arsenal, I have no hesitation in whipping this pistol out and shooting down any new endeavor or opportunity that my organization brings to my attention. Yes, by the nature of my role, I am the harbinger of doom, and yes, this makes me very popular in the organization….not!

Although this question has helped me think critically from a risk standpoint about the many possible challenges and obstacles to achieving objectives, I think it has also in a sense narrowed or limited my overall understanding of the business. According to the 2011 State of Internal Audit Profession Study, one of the key criteria or characteristics of an internal auditor that will bring value to an organization is that of understanding the organization’s strategy and business model. However, by only asking or thinking of the things that can go wrong, I miss the other side of the coin and the fuller picture of ‘what can go right?’ and taking into consideration the current opportunities that exist for the organization to grow and succeed.

The role of an internal auditor in the organization by its nature is to help the organization play defense. However, in order to have a balanced view of the organization and to stay abreast of the opportunities for the organization to grow, it is also important to ask, ‘what can go right’ in order to be in a position to better serve our organizations. In a recent conference I attended specific to risk assurance and risk mitigation, various categories of organizational risks were presented in the form of a pyramid. Compliance and financial assurance (the areas auditors are most known for) sat at the base of this pyramid of risk whereas strategic and enterprise wide risks formed the middle tier and top tier of the pyramid. Often, it is these middle tier and top tier risks that management must consider very carefully when making critical decisions. Therefore, from an audit standpoint, it is at these critical decision making points where we can add most value through having an in-depth understanding of the business issues at hand. 

Here are some ideas for ways to better understand the business: 

1. Ask for a seat at the table – Depending on the amount of time you’ve been in an organization and the relationships you’ve built, it might be appropriate to ask to participate in management meetings and forums. I have found that this is the best way to understand current events/issues and also to observe management decision making and priorities.

2. Read, read, read – Get your hands on anything you can about your organization (internal and external) and about your industry.

3. Get out from behind your desk/computer and go hang out by the water cooler/coffee pot – Auditors and accountants are often pigeon-holed as ‘bean counters’ and stereotyped as not being the most social of beings. However, to be a good auditor, it is important to be able to connect with people, because after all, it is all about people.

The bottom line is this: Let us (fellow auditors) in addition to already asking, ‘What can go wrong?’, also ask the question ‘What can go right?’. My guess is that this is the question management asks more often. What can go right if we pursue this opportunity? What can go right if we choose to partner with this vendor? What can go right if we launch this new funding stream? And on, and on, and on. 

Haven’t we heard that knowledge is often not always knowing the right answers, but having the ability to ask the right questions? Let us consider carefully the questions we ask, because it has the possibility of opening doors and expanding horizons beyond our imagination. When we stop asking ‘What can go right?’ we will stop pursuing opportunities to grow.  I was recently at a conference where the speaker was commenting on the current state of the economy and in particular the current pace of technological changes. His bottom line is that companies have to pursue risk and opportunity to grow. There is no such thing as the ‘status quo’ or of coasting as if returns from yesterday will remain the same. If you do not pursue growth, you will cease to develop, stagnate, and soon become extinct.

Our audit role as assurance providers and risk practitioners is to provide management with an objective view of the pros/cons to facilitate decision making and to do so in manner that is disciplined and that truly counts the cost of a decision so that the wisest decision possible is made giving the organization the best chances for success. 

Carpe diem!


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