In today’s dynamic risk environment, it’s crucial for internal audit leaders to develop forward-leaning strategies that will not only address emerging threats, but also build support within the board and the wider organization for new and more agile approaches to managing risk.
In this edition of AuditTalk, Richard Chambers (Senior Internal Audit Advisor at AuditBoard and former President & CEO of The IIA) sits down with three internal audit changemakers — Dominique Vincenti (Vice President and Chief Audit Executive at Uber), Ben Phillips (Vice President and Chief Audit Executive at PetSmart), and Rick Baltz (Vice President of Internal Audit at Belden, Inc.) — to discuss how they drove strategic change in their own organizations, including:
- How they align internal audit with the company’s overarching strategy.
- Lessons for audit leaders to invest in new technologies — and in the human side of the business.
- Key strategies to future-proof internal audit.
Watch the full conversation, and read the can’t-miss highlights below.
As a chief audit executive, how do you bring a strategic vision to the function of your organization?
Dominique Vincenti: “When I arrived at Uber, taking a strategic approach to the function meant taking the time — although things have to move fairly fast at Uber — with the team to understand where the company was at and where the company was going. Then, making sure that we had absolute clarity on our mission — as it relates to our role — within the entirety of the Uber world to set a vision for what we wanted to be in the future. Once that was very, very clear, we could set a strategy that would allow us to go from that point A at that moment in time, to point B in the future.”
Ben Phillips: “At PetSmart our executive team has outlined a series of initiatives that we call our long-range plan, which is a three- to five-year look into the future. It describes at a high level where we want to place bets to succeed. For example, we know we want to significantly improve our customers’ omni-channel experiences… Once we have an understanding of where our business is going to focus its investment and where we want to innovate, we can tailor our assurance and consulting work to support those objectives. In this area our efforts extend well beyond traditional risk and control-based work, and we seek to provide insightful and reliable analysis of all this business information to support our decisions. We really want to be part of that effort to innovate and drive positive change at PetSmart.”
Rick Baltz: “I think another important aspect is being relationship-centric. Building that relationship with the audit committee, your stakeholders, and having a seat at the table. I sit on various committees within the financial leadership team. I have sessions with the CFO on a weekly basis, and with the CEO at least on a quarterly basis, if not more often. I have private sessions with the audit committee chairman to make sure that we’re aligned on expectations and where I see things moving forward over the next couple of years.”
How do you make sure that internal audit is aligned with the company’s overarching strategy?
Ben Phillips: “At PetSmart internal audit is very closely aligned with the overarching strategy. I think a lot of the traditional work of internal audit, internal control testing and operational types of assurance work are really table stakes. That’s the bare minimum an internal audit function needs to deliver, but I don’t think it’s going to be delivering sufficient value to support a well-resourced internal audit function that can really act as a change agent. Internal audit needs to understand the organization’s plans to grow and prosper, what the strategy is, and make sure that we’re delivering assurance and consulting work against those projects.”
Dominique Vincenti: “We have a quarterly risk refresh — it’s not just something we do once a quarter, and don’t go back to it. This is the pinnacle moment of efforts that are happening every day throughout the internal audit team, organized around what we call our thought leadership pods, where my entire management team is in contact almost on a daily basis with the leadership across the company to constantly gather information and understand what they’re doing, what they’re deciding, where they’re going and how all of this is connected. Then they digest this information on an ongoing basis, collect it, analyze it, and we come together once a quarter to consolidate everything. Then we step back a little and try to understand, do we now have a complete view that is consolidated, granular, precise, and with all the necessary nuances? We never stop doing this — that’s the cost we have to pay to stay aligned with a company that evolves at a very, very fast pace and that can spin off a business that is going to be $0 today, but $10 billion within three months in a particular corner of the world.”
Rick Baltz: “At Belden, strategy and alignment across the entire organization is critically important. We have a strategic deployment process where the CEO lays out his near term and long term objectives and goals for the corporation, and that cascades down to every function within the organization including my internal audit team. On a monthly basis, along with the financial leadership team, we talk about where we are relative to those objectives and goals. I feel fortunate that’s ingrained in the organization, which makes it a lot easier for me to make sure that my team is very closely aligned with where the organization’s going.”
What is the one key strategy that you would recommend internal audit teams adopt in order to future-proof their function?
Dominique Vincenti: “One piece of advice is to align with the senior leadership and the board about what matters, and engage and share your view of how internal audit is going to impact what matters. A few months down the line, if you ask the CEO, “Is my function strategic and supporting the good governance of the company in the achievements of its long-term value creation?” — you’ll have a CEO who says, “Yes, you are on the same ship as us, and you’re helping us steer in the right direction, the right way, and keeping us in check with what we committed to accomplish.”
Rick Baltz: “When I think of future proof, I think of sustaining the function and not getting to the point where the C-suite or audit committee is saying, “Why are we expanding these funds on this function when we’re not sure what value they’re bringing?” My one piece of advice is to make sure you build those relationships at the audit committee level, the C-level, and the business unit level — and be able to succinctly describe what the vision is for internal audit, and how internal audit is aligning with the corporation in achieving its objectives and goals over the next one year, two years, three years. Bringing that vision to the function so you can in turn bring in the right resources to support that vision is critical to future-proof any function, let alone internal audit.”
Ben Phillips: “Organizations today are looking to increase productivity and innovation with new tools and technologies that they may not be familiar with — new practice areas like advanced analytics, process automation, artificial intelligence. As far as future-proofing internal audit, I think we need to be seriously focused on upskilling our teams so we can gain facility with these technologies like automation and analytics. If we’re successful in this area, we can help both our internal audit teams and our internal customers perform their work more efficiently. The more time we can save by automating, for example, routine and repetitive tasks, that time is freed up, or for doing analysis, doing risk assessment, interpreting information, but we can ultimately provide greater assurance and greater value to the company with fewer audit resources.”
What’s one thing you learned about yourself as an internal audit leader in the past 18 months?
Rick Baltz: “I had undertaken a few years ago a path to automate a lot of the processes that would support a remote learning environment. I began to use AuditBoard as a team three years ago, which very significantly helped us as we had to work in a remote environment. My team is located around the world in different time zones. AuditBoard and that larger undertaking a few years ago really got us through this pivot that we had to go from being on site at locations to having to do this work remotely.”
Dominique Vincenti: “We can talk about strategy, analytics, techniques, tools, and methodologies, but fundamentally what the past 18 months have helped us realize is that we are fundamentally in a human-based business. We’ve always talked about the importance of EQ, but we more often talk about our IQ — about the tools and techniques and smartness that we put into the work that we do. But how do you keep a team together? How do you stay connected to your supporters and your customers, and how do you still give a sense of community, of doing something together? I would summarize this by one word: empathy. We’ve talked a little about strategy. If there were two things I would advise the audience to think about going forward as particular qualities that they need to have as leaders, it’s strategic thinking and empathy.”
Ben Phillips: “As we faced the crisis in the last 18 months, I found myself relying on business relationships throughout our organization to identify opportunities where my capable team could add value to the business and continue either internal audit operations or in some cases company operations in a crisis. I think I’ve been successful at helping our leaders see the value there and making sure that our team stays plugged in. I’m really proud of the way they came through the pandemic and the way that internal audit has demonstrated that we’re dedicated to the company’s mission.”
Stay tuned for more AuditTalk video interviews with audit community leaders about industry issues, insights, and experiences!