Finance vs. internal auditors: time to stop the bloody war
“Here come the auditors” is a rally cry that is often heard in organisations. Being in Internal Audit for twenty-five years I have found that there has always been a distinct sense of rivalry and antagonism between the finance department and Internal Audit. Very much like the Blues and the Reds where we - the internal auditors - are seen to be on different teams, fighting each other. With the winner being the one who can either hold out or the one who can attack and get the results.
This Expert Insight is written by Kingsley Bye, Chief Audit Executive at Durban-based consultancy KBAudit
There have been clients who present the wrong accounts and hide or block information to prolong the audit and hinder progress. Some may be hiding transgressions or errors but the majority have simply made this a way of operating. To make life difficult for the auditors is a type of lose-lose game condition.
This does not apply as much with the operational side of the business as I have found that operational people are more co-operative and see Internal Audit as helping improve productivity and as a sounding board. We are seen as specialists who can help with system improvements and look at more efficient ways of doing things. That is often not the case with finance.
"The fact that accountants and auditors are so closely related, and have had the same training, could in itself be the cause of conflict."
Now it is a law that two things cannot occupy the same space. The closer they get the bigger the explosion. This can range in extremes from a couple fighting to the atomic bomb. The fact that accountants and auditors are so closely related, and have had the same training, could in itself be the cause of conflict. Many accountants were auditors so they know where to put the 'stops' in. It is a well-known phenomenon that wars fought between brothers (for example the American Civil War, tribal wars or the European wars) are often the bloodiest of all wars. The corollary to this is the amazing synergy that results when brothers decide to work together towards a common goal.
Auditors are not trying to occupy the same space as the accountants in the finance team. We have become a specialist skill and are growing to be seen as distinct from Accountants. We will however always remain brothers and are all cogs of the same machine.
"Some organisations also wrongly include the audit results as part of management KPIs."
Internal Audit is striving to be seen as a business enabler with the role of 'trusted advisor' to executive management. This is seen as a threat when work has not been properly performed or where a 'red' report is likened to the red flag to a bull. It is true that in the past Internal Audit has been seen as the 'stick' to keep people on their toes. Some organisations also wrongly include the audit results as part of management KPIs (key performance indicators). Both the 'red' report and the 'stick' are the wrong way of doing things.
This is a time for change and for challenging set paradigms. This is the time for control self-assessments, where management assess their own control environment; and for combined assurance, where all tiers of business work together to protect the organisation. We are all on the same team and have the same purpose to make our organisation grow and prosper.