In this edition of AuditTalk, Tim Berichon, Director of CAE Solutions at The Institute of Internal Auditors, draws on a joint report by The Internal Audit Foundation and AuditBoard, Internal Audit’s Digital Transformation Imperative, as well as his own book, Ready and Relevant: Prepare to Audit What Matters Most, to share insights on:
- How technology can be a capacity multiplier to empower internal audit to take on bigger opportunities, especially for small teams.
- Why automation can free up your team’s human resources to add value with uniquely human soft skills.
- What success looks like — testing full populations, automating administrative tasks, increasing reliability — and how to get there.
Watch the full AuditTalk video, and read the can’t-miss highlights below.
People & Processes Enabled by Technology
“Don’t think of tech as something separate, think of it as integral — something that enables something else. In consulting, we used to say, “The three-legged stool is people, process, and technology.” I would actually question that — I say, it’s just people and process. Technology automates or enables the process. Either your process is manual or it’s automated, it’s either on or it’s off. It’s people and processes that get things done and technology can enable both.”
“A budget is the amount of money you have to buy the optimal combination of people, process, and technology — but technology rolls into both of them… I had nine FTEs worth of budget. I had six or seven internal staff, meaning humans, and I had a couple of what I called “e-auditors” using RPA and other tools. I love them — they come to work every day. They do great work papers, the same every time, very standardized… Look for something sequential, something administrative, and try to get e-auditors out there doing some work for you.”
Free Up Your Human Resources to Add Value
“Technology and automation enables us to be agile as a department. This was paramount for me as a Chief Audit Executive, knowing my back office was fully automated, and knowing that my team — my human resources — were not bogged down in administrative tasks, not doing things that were duplicated. I didn’t have to ask them for status, et cetera because I could just self-serve. I could see everything going on because it was all in the application, it was all in the platform. My human resources were released to use their human qualities to provide opinions, insight, intelligence, and to be responsive, be flexible, and spend time with people. That’s what my book is all about — it’s those soft skills, not the technical side, that will make or break you as you move up an organization, and will make or break you as you try to be a more responsive audit function.”
“When someone calls you from the business, from the governing body, from the C-suite, and presents an opportunity for internal audit to work on something that matters to the organization, matters to the enterprise, matters to the business accomplishing its objectives at an important level — you want to be able to say yes to those opportunities. I would not lose that opportunity for internal audit to be very relevant, or lose that opportunity for my audit team to work on a very exciting, relevant project that they learn from, especially if it’s something new. I was always ready to say yes, and one of the reasons is that I knew my back office was taken care of with technology. I had a diverse team of various competencies, skill sets, and perspectives so we can have good debate and solve problems. I had co-source partners that had my back and always made sure that I was successful. I was ready to say yes because I had all these things.”
“When automation is done right, what a capacity multiplier of your human resources. It was amazing what we got done on my smaller audit teams. When I left Tyco, I was the Chief Audit Executive of smaller audit teams. I’m talking nine FTEs of budget, six or seven internal team members and then two or three FTEs worth of money for co-source partners. We got a lot done with that kind of budget — a lot of strategic things… we were able to do those things because we were automated and using that automation in the right way. It multiplied the ability of our smaller team to do a lot of work.”
What Automation Success Looks Like
“As an audit practitioner, I’ve focused a lot on IT general controls. I want to make sure those are solid. I didn’t have a lot of tolerance for exceptions there. They should be in place and be working. If I can have solid IT general controls wrapped around my applications in all lines of the business, then I can rely on that automation. Then it’s reliable, it’s reusable, it works 24/7, it works while I’m sleeping.”
“Automation allows us to test the full population. We don’t have to sample and extrapolate anymore because we’re testing the whole population. Having been on the other side of the audit table, it’s really powerful when you can say, “Hey Tim, we tested this entire population and here’s what we found.” That’s a lot of confidence. I don’t need to have 95% confidence in the sample size. You can just tell me the facts. Automation, data-driven findings, and data-driven recommendations are very relevant discussions to someone on the other side of that audit table.”
“One reason to automate is the more we can get the second line and the first line under control, repeatable, reliable, et cetera, the less internal audit has to do on that particular process or business unit. I can release those hours to work on something else. Please don’t worry, it’s not a situation where internal audit’s budget is going to decrease because I’m automating myself and I’m helping others automate. People are going to notice how relevant that work is, how important that work is, and the value we’re enabling through helping others to automate and do their jobs right.”
“The smaller the team, the more need for automation because we have such limited human resources. If we’re bogged down in these manual and administrative tasks, then we don’t have enough time available to be meeting with people like we should, building relationships, helping people solve problems. That’s what the governing body wants us to do, help the business solve problems and be more predictable, more forecastable, decrease risk profile, et cetera. We can’t do that if we’re bogged down in administrative tasks.”
Stay tuned for more AuditTalk video interviews with audit community leaders about industry issues, insights, and experiences!