This document outlines 10 principles or "commandments" for internal auditors to add more value. The principles are: Educate, Participate, Integrate, Communicate, Facilitate, Authenticate, Conserve, Tolerate, Originate, and Respect. The document suggests that internal auditors should focus on educating themselves and clients, actively participating to understand the business, integrating as part of the team, listening to clients, facilitating solutions, being authentic in their work, conserving controls, accepting criticism, thinking creatively, and respecting others. The overarching message is that internal auditors should focus on consultation, education, and partnership rather than just policing to maximize their value.

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Can You Be An “EPIC FACTOR”
OR
“The Ten Internal Audit Commandments”
Paul Wallis
Director - Internal Audit
City of Vaughan

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Concerns Are Evident
• More than half (55%) of Senior Management don't
feel that Internal Audit adds Significant Value to their
Organization
• Nearly 30% of Board Members believe Internal Audit
adds less than Significant Value
• On Average, only 49% of Senior Management
believe Internal Audit is performing well at delivering
on Expectations
Source: PWC 2014 State of Internal Audit Profession | www.pwc.com/ca/iastudy

3. 79%
of board members
believe that internal
audit can contribute
to the organization
[Capability]
79%
of board members
believe that internal
audit can contribute
to the organization
[Capability]
44%
of executive
management
see internal
audit
contributing
significant value
35 % Gap
23 % Gap
56%
of board
members view
internal audit in
their organization
as strong
Source: Adapted from - PWC 2013 State of Internal Audit Profession |
www.pwc.com/ca/iastudy
Expectation Disconnection

4. The Choice
From Rags to Riches
Internal Auditors have
a choice. They can
give emphasis to
policing and protection
or they can give
emphasis to learning
and consultation
Peter Block: Stewardship – Choosing
Service Over Self Interest
FROM
TO
IA

5. Ten Principles or Commandments
• E – Educate
• P – Participate
• I – Integrate
• C – Communicate
• F – Facilitate
• A – Authentic
• C – Conserve
• T – Tolerate
• O– Originate
• R – Respect

6. Principle 1 - Education
Develop
Technical
Skills
Educate Our
Clients
Educate
Ourselves
More Than
Just
Learning
About How
To Audit!!

7. Principle 1 - Educate
Educate Ourselves
• Develop a better
understanding of the clients
business and the
interdependencies.
• Make sure we really
understand what our core
business and knowledge skills
are.
• Be sure we know what
constitutes value to our clients.
Educate Our Clients
• Build risk and control
awareness – education
sessions.
• Promote the internal audit
value proposition.
• Support and promote
stewardship responsibilities at
every level.

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Principle 1 - Educate
The staff group’s [of which Internal Audit is one] primary
focus is to transfer their expertise to the line units.
Education, support and consultation is what replaces
policing and granting permission.

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Principle 2 - Participate
Fundamental Questions
• Are we good at just Finding Issues or are we good at
helping find Solutions??
• Can we really make Constructive Recommendations
without truly Understanding the Business??
• How do our Clients view us – Helpful or “Rats…..the
Auditors are coming”!!

10. Principle 2 - Participate
What Makes Clients Happy – My
Experience
• We really care about their
Business.
• We are open to Discussion.
• We are Solution Focused
not Problem Focused.
What Makes Clients Sad – My
Experience
• Unwilling to offer Advice and
Solutions.
• Lack of Depth.
• Impractical and Unrealistic
Recommendations.

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Principle 2 - Participate
Tips
• Remove Recommendations from Reporting – Participate
with Client in Developing Action Plans.
• Participate in Focus Groups and Key Projects/Studies –
Offer advice when it is asked for.

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Principle 3 - Integrate

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Principle 3 - Integrate
Fundamental Questions
• Are we part of the Organization or just Observers?
• Are we willing to get our hands Dirty?
• Are we willing to commit to Organization Values?

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Principle 3 - Integrate
Tips
• Use “Independence” Wisely.
 Real Independence [Objectivity – “State of Mind”].
 Perceived Independence.
• Be Part of the Team.
• Be a Change Agent!

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Principle 4 - Communicate
AuditorClients
The Most Important
Skill for an Auditor is
the Ability to Listen!!

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Principle 4 - Communicate
Fundamental Issues
• The “Recommendation Merry Go Around”.
• Confusing Communicating with Reporting.
• “Publish or Perish” Mentality.

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Principle 4 - Communicate
Tips
• Read the Standards – Carefully!!
• Listen First ………….and Often.
• Don’t be Married to the Report – Consider what we are
trying to Achieve.

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Principle 5 - Facilitate

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Principle 5 - Facilitate
Tips
• Talk to Many – Get the Total Picture.
• Facilitate Solutions in Groups [Risk Management].
• Facilitate to Promote Internal Audit Core Values.

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Principle 6 – Authentic[ate]

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Principle 6 – Authentic[ate]
Misalignment??
“…..so you have a unit in finance evaluating the operating
controls of line departments and reporting directly to the
board of directors. Very Muscular!!”
Peter Block: Stewardship – Choosing Service Over Self Interest
“We are here to help”
Various Random Auditors

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Principle 6 – Authentic[ate]
Tips
• Support the Integrity of the Client’s Concerns.
• Place more Importance on Pursuing the Purpose of Helping
Others rather than being Prideful of what you Know.
• Seek win-win partnerships – Give and Take.

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Principle 7 – Conserve

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Principle 7 – Conserve
Problems of Bureaucratic Control
• Rules easier to make than Delete….Leads to Red Tape.
• Organization can become too Standardized and not
Flexible.
• Promotes a more “Policing” Culture.

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Principle 7 – Conserve
Questions??
When was the last time you either recommended removal of
a control or recommended removal of a Policy?
Don’t we usually recommend controls or policies, what will
we do if we don’t?

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Principle 7 – Conserve
Tips
• Practice and Promote good “Control Economics”.
• Place Emphasis on the Right Controls to Manage the Right
Risks.
• Look for Redundant or Non-Sustainable Policies.

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Principle 8 – Tolerate

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Principle 8 – Tolerate
Fundamental Questions
• Are we Prepared to accept Criticism from our Clients?
• Are we Prepared for the Value Question?
• Do we Accept Ambiguity?

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Principle 8 – Tolerate
Tips
• Ask the answer to the Value Question!!
• Keep an Open Mind.
• Recognize and React to Criticism from all our Clients

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Principle 9 – Originate

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Principle 9 – Originate
Do we Follow the Yellow Brick Road?
OR…….
Do we Think Outside the
Box?
Because

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Principle 9 – Originate
Tips
• Question Everything you Do.
• Take Intelligent Risks.
• Support and Demonstrate Continuous Improvement.

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Principle 10 – Respect
“Don't ever underestimate the importance of treating others
with respect and kindness.”
Alison Levine, On the Edge: The Art of High-Impact Leadership

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Principle 10 – Respect
Tips
• Respect the Client’s Time!
• Respect the Client’s Business!
• Respect the Client’s Problems!

35. Summary in Word Bites
1. Educate! Educate!
Educate!
2. Actively Participate!
3. Be a Team Player!
4. Listen First and Listen
Often!
5. Facilitate Solutions with
Many!
6. Do What you Say!
7. Practice Control
Conservation!!
8. Accept and Act on
Criticism!
9. Think Outside the Box!
10. Respect Others!

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Hmmmmm!!
Auditing’s deeper purpose is to support stewardship
responsibilities at every level. In a stewardship
environment, middle managers and core workers would be
the prime customers, top management and audit
committee would get secondary attention.

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So!! – Can You Be an Epic Factor??

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Paul Wallis
Director - Internal Audit
City of Vaughan
paul.wallis@vaughan.ca