Leveraging Integral theory, this presentation talks to the question of how to optimally blend internal audit, risk and related technical skills with relational capacity with a view achieving Trusted Advisor status.

1. ‘The Integral Auditor’
Building Capability Using the Integral Framework

2. DON’T YOU LOVE BEING AN
INTERNAL AUDITOR?
As Internal Auditors we are very
fortunate.
We are in a unique and privileged
position at or near the apex of the places
we work with regular access to Directors
and Senior Executives.
Our role offers us the opportunity to
significantly influence the vitality,
wellbeing and the success profile of our
organisations and the people we work
with.

3. DON’T YOU LOVE BEING AN
INTERNAL AUDITOR?
• We bring many strengths to our role
– Professionalism
– Objectivity
– Business acumen etc
• Like all professions, we also face our challenges.
Being ‘audited’ for many people can be
perceived as an uncomfortable
experience.
Who of us really likes being
reviewed/assessed/audited?

4. DON’T YOU LOVE BEING AN
INTERNAL AUDITOR?
1. How do we not take this personally?
2. How do we create trusted and mutually beneficial
relationships with our customers?
3. How do we build our personal and collective non-
technical capability to cultivate, maintain and leverage
relationships that are so fundamental to our success?

5. WHAT WE WILL SHARE TODAY
Topic
1 Growing complexity
2 Recent research into Internal Audit
3 Hard truth for auditors
5 Development research
6 Do we have an issue?
7 Foundational growth
8 What was my path?
9 Clarifying the way ahead
10 Vertical development
11 Vertical development in an Integral context
12 Internal Auditor development maturity
13 Trusted advisor curriculum
14 Risk and perspective
15 In conclusion

6. A CONTEXT OF GROWING
COMPLEXITY
Our world faces rapid almost daily change caused by:
• Increasing global interconnectedness
• The burgeoning information economy
• New technologies that disrupt existing work practices
• Different values and expectations of new employees entering the
workplace
• Increased globalisation with a need to lead across cultures
• Stakeholders demanding more from Internal Audit

7. GROWING COMPLEXITY
‘PERPETUAL WHITEWATER’
A 2012 IBM study of over 1,500 CEOs identified
their number one concern about the global
business environment as ‘Perpetual Whitewater’,
characterised by:
• Volatility: change happens rapidly and on a
large scale
• Uncertainty: the future cannot be predicted
with any precision
• Complexity: challenges are complicated by
many factors and there are few single causes
or solutions
• Ambiguity: there is little clarity on what
events mean and what effect they may have

8. GROWING COMPLEXITY
In the ‘Perputual Whitewater’ environment we
operate within, the Centre for Creative
Leadership* in their 2011 whitepaper on the
Future Trends in Leadership
Development, define the most valuable
skills, abilities and attributes leaders will need
into the future are:
• Adaptability
• Self-Awareness
• Boundary Spanning
• Collaboration, and
• Network/Systems thinking
• How do these contrast against typical
Internal Audit skills, abilities and attributes?
(*Whitepaper: Future Trends In Leadership Development, 2011).

9. GROWING COMPLEXITY
In our increasingly complex and
ambiguous world, how do we
as individuals and the
profession more broadly, build
the capability necessary to be
perceived by our stakeholders
as ‘Trusted Advisors’?

10. RECENT RESEARCH INTO
INTERNAL AUDIT
Within the context of growing
complexity and ambiguity, let’s
examine a few of the regular
studies published regarding about
the state of the Internal Audit
profession, trends, developments
etc.

11. RECENT RESEARCH INTO
INTERNAL AUDIT
Internal Audit is: Internal Audit is largely a
relationship and communication
business
Requires high levels of Emotional
and Social Intelligence to be
successful
The IIARF recommends a strategic,
ongoing focus for developing
behavioural capabilities as the
foundation for the application of
Internal Audit techniques
IIA Research Foundation - 2011 Report

12. RECENT RESEARCH INTO
INTERNAL AUDIT
Leading CAEs stated that the skills
necessary for success are effective
communication, the ability to build strong
relationships and a capacity to engage
internal and external partners
The non-technical ‘softer’ enabling
attributes of success were ranked near the
bottom in terms of investment focus
In a complex, volatile and changing
environment the ‘softer’ attributes of
Audit performance are increasingly critical
to the success of Internal Audit functions

13. RECENT RESEARCH INTO
INTERNAL AUDIT
The role of Internal Audit is
evolving, stakeholder
expectations are increasing – this
requires competencies that
exceed traditional technical Audit
skills
Notwithstanding our increasingly
complex environment, less than
half of the Audit functions
surveyed had plans to invest in
People / Leadership capability
development

14. RECENT RESEARCH INTO
INTERNAL AUDIT
CAEs must be much more than
just exceptional technical
operatives if they want to be true
partners with the Audit
Committee and respected
advisors to senior executives
CAEs must shore up their
leadership, communication and
commercial skills

15. RECENT RESEARCH INTO
INTERNAL AUDIT
The effective ‘internal auditor of the
future’ possesses a broad range of
non-technical attributes in addition to
deep technical expertise
Soft skills are the new hard skills
Internal Auditors should apply as
much effort and precision to the
acquisition and development of non-
technical attributes that they currently
apply to the enhancement of their
traditional audit expertise
Published February 2013

16. THE HARD TRUTH FOR AUDITORS
SOFT SKILLS – A KEY TO SUCCESS
The research from the IIARF, Ernst
Young, PwC, Protiviti and IBM is
consistent and very clear - while
technical skills are a must, the
emerging landscape of global
complexity and change amplifies the
need for Internal Auditors to
strategically upgrade their ‘Inner
Operating System’.

17. THE HARD TRUTH FOR AUDITORS
SOFT SKILLS – A KEY TO SUCCESS
The development required is
not about adding another
‘App’ to your technical toolkit.
It requires investing in
yourself at a foundational
level to expand beyond
traditional analytical rational
thinking.

18. INTEGRATING THE TECHNICAL
WITH THE CREATIVE

19. DEVELOPMENT RESEARCH
Creative and
Relationship
Attributes
Task and Reactive
Attributes - often
perceived as where
Internal Audit lives

20. DEVELOPMENT RESEARCH
There is a high correlation between personal development maturity, creative
leadership behaviours and downstream leadership effectiveness, particularly in
dealing with ambiguity & complexity and resultant organisational performance.

21. DO WE HAVE AN ISSUE?
1. Increasingly complex, ambiguous,
So, do we have an issue?
connected, fast moving world
2. A recognition from the IIA and others
about the increasing importance, and
INTERNAL AUDIT?
critical nature of leadership and
relational capabilities for success
3. An ambition for the profession to be
perceived as a Trusted Advisor, rather
than corporate cop
4. A clear link between leadership
effectiveness and personal capability
maturity
5. An underinvestment by the profession
in leadership and people capability
development

22. FOUNDATIONAL GROWTH
It means developing system thinking,
understanding conflicts and paradox,
deepening people skills through
experiential learning, expanding
EQ/SQ, self awareness, empathy,
relationship capacity to better engage
with and serve your customers and
peers.

23. FOUNDATIONAL GROWTH

24. WHAT WAS MY PATH?
1. Appointed to CAE role at Australia Post in 1999
2. In 1999 completed first immersive 5 day
experiential self awareness program
3. Since been intimately involved in more than 30
in-depth personal development programs,
The clear lesson was that the particularly for men
more I worked on who I 4. Men’s Group leader for almost 15 years
thought I was, the more my
5. Transformative experiential Native American
perspective expanded and the
‘Vision Quest’ process – 10 days outback
more effective I became in
including 4 day ‘solo’
the workplace in terms of
adaptability, influence, 6. 1,300 hours in one to one or group work
relevance and value, both to 7. Certified in many development paradigms
team mates and stakeholders.

25. CLARIFYING THE WAY AHEAD?
So, in my view we need something to
help us clarify the complex way ahead.
We need to enable a build of personal
capability if we are to move with
strength to becoming Trusted Advisors.
Being technically proficient will not be,
and can never be enough.

26. WHAT IS REQUIRED?
– VERTICAL DEVELOPMENT
Traditional technical (Horizontal) development
More Technical Skills
is like pouring water into an empty glass, with
the glass filling up with more content: e.g. new
knowledge, technical audit skills.
Vertical Development aims to expand the glass
itself. To enable people to transform their
current way of making sense of the world,
towards a broader perspective.
An expanded glass is reflected in more evolved
stages of adult identity development.
For the ‘right’ development to take place we
must undertake both horizontal and vertical
development

27. VERTICAL DEVELOPMENT FOR
AUDITORS
Vertical development
describes growth in
maturity of perspective,
and has been shown to
be the best predictor of
leadership effectiveness

28. VERTICAL DEVELOPMENT FOR
AUDITORS

29. VERTICAL DEVELOPMENT IN AN
INTEGRAL CONTEXT
The Integral Framework makes clear
that every event or situation may be
understood within the context of interior
and exterior dimensions in both the
individual and the collective
Regardless of the scope and depth of
the organisational situation, by
applying the Integral Framework, we
are able to analyse and assess even
the most complex issues in a balanced
and comprehensive manner.
This holistic process is what makes
this approach so powerful and
leading-edge

30. VERTICAL DEVELOPMENT IN AN
INTEGRAL CONTEXT
Helps makes sense of
complexity by
incorporating ALL
perspectives
Important in leading
and influencing
people and in
implementing change
For any issue, all 4
perspectives are
relevant at all times

31. VERTICAL DEVELOPMENT IN AN
INTEGRAL CONTEXT
Integral Theory provides a framework that can be used to understand the individual and the
environment in which he or she functions, and can be used to rationalise existing leadership and
management practice.
Addressing the four quadrants helps us to:
1. Become more aware of thoughts, emotions, feelings,
self-limiting beliefs, assumptions and how they
influence client relationships (upper left quadrant);
2. Review individual behaviours and observable
performance (upper right quadrant)
3. Considering the collective interior, unconscious
assumptions and the way things are done, the
culture (lower left quadrant)
4. Clarify the objective aspects, organisational
systems, rules, conscious ways of operating (lower
right quadrant)

32. VERTICAL DEVELOPMENT IN AN
INTEGRAL CONTEXT
Vertical
Development in an
Integral Context

33. INTERNAL AUDITOR
DEVELOPMENT MATURITY
Extensive adult
Upper Left Quadrant development research
shows that adults grow and
evolve through several very
(5) Trusted 
Advisor distinct stages of personal

(4) and professional
Collaborator  development, and ways of
(3) ‘seeing/interpreting’ the
Achiever  world.
(2)
Expert These stages correlate

(1)
almost identically to
Compliant leadership capability and
performance.

34. INTERNAL AUDITOR
DEVELOPMENT MATURITY
Auditor Description / Primary Focus / Characteristics Integral
Development Quadrant
Stage Orientation
(1) Compliant Rules and regulations, black and white, tangible, tick the box,
simplistic, transactional
(2) Expert Expertise, process quality, procedures and best-practice,
efficiency, improvement, value preservation, identifies self with
role
(3) Achiever Strategic focus, Delivery of KPI’s, results, effectiveness and
efficiency, goals, acknowledgement
(4) Collaborator People oriented, collaborative, value creation and preservation
(5) Trusted Holistic, relational, whole system view, organisational
Advisor perspective, comfortable in ambiguity and complexity, sought
out, seat at the table, value creation.

35. THE INTEGRAL AUDITOR
– TRUSTED ADVISOR CURRICULUM
Compliant Expert Achiever Collaborator Trusted Advisor
Capability LEVEL 1 LEVEL 2 LEVEL 3
Self Awareness & Overcoming Immunity to
Self Leadership Values Based Leadership
Authenticity Change
Communication and Negotiation & Courageous
Dialogue and Collaboration Authentic Dialogue
Influencing Conversations
Dealing with Uncertainty Taking an Integral Adapting to a changing
Systems Thinking
and Ambiguity Perspective workplace & world
Solution Oriented Mindset - Knower/Learner &
Growing Through Goals Partnering for Value
Curiosity and Innovation Victim/Responsibility
Building Effective Influencing Across
Relational Leadership Developing People
Relationships Boundaries

36. THE INTEGRAL AUDITOR
- TRUSTED ADVISOR
The capability build curriculum is
designed to lead Auditors through all
Integral Quadrants in a staged
approach toward leadership maturity.
This is conducted through a tailored
combination of workshop, individual
and on the job learning experiences
and activities.
It is informed within the context of
prevailing organisation and Internal
Audit group culture and existing/
planned horizontal development.

37. RISK AND PERSPECTIVE
As part of the journey, from an Audit
methodology perspective, Integral Theory can
used as the framework for ensuring you
consider the context and internal and external
perspectives, collective and individual, to
ensure you develop an holistic a view of
causes of organisational issues – so that you
are not just reporting symptoms in Audit
reports.
Integral leads the Auditor toward a greater level of insight, and promotes better
more informed conversations with stakeholders.
By undertaking Integrally based vertical capability development, in conjunction
with appropriate technical skill delivery, optimally positions the Internal Auditor
for exceptional service delivery and for a trajectory to Trusted Advisor status.

38. IN CONCLUSION
In our increasingly complex
and ambiguous world,
Internal Auditors must build
The key challenge for Internal Auditors
the right balance of
horizontal and verticalfuture is to expand in a
into the
capacity to be perceived by
balanced way – technical skills are
our stakeholders as ‘Trusted
important but VERTICAL development is
Advisors’
(increasingly) critical to your success

39. IN CONCLUSION
So the question for each of you:

40. david@davidmallard.com