What’s your reaction to change and even disruption in Internal Auditing? 

I think it’s comprehensive – and terrifying! However, is there any more change now than at comparable crisis points in human history? We could argue that there isn’t – the major difference is that information is now instant, and often overwhelming. So it’s not surprising if people feel they’re living in unprecedented times.

What occurs to me is a change that has been taking place over several decades now. I don’t know if I’d place it under social, technological or environmental – I think it crosses all three and of course then affects all the other PESTLE areas. It’s the neurological changes brought about by recent technology – the internet, smartphones and other devices.

I’m no Luddite – I love my smartphone beyond all reason, and don’t want to return to using only reference libraries when I have a question – but we must acknowledge that we have evolved a great deal neurologically in a very short time. Nicholas Carr’s book The Shallows sets the situation out very well. While appreciating all that technology has brought us in recent decades, we should also acknowledge that it has changed how our brains work.

I certainly recognized his comparison of his attention span during his student years compared with now. How many of us remember losing ourselves in a book for hours at a time? Nowadays we’re lucky if we go half an hour without drifting to check our emails!

This in turn must affect every aspect of our lives, surely. And we need to take it into account when thinking of how our professions will develop. How do we take advantage of the efficiency technology offers? At the same time, how can we discipline ourselves – and train younger colleagues, who never knew any other world – to use valuable older techniques, relying on silence, reflection, and pen and paper. Many will find this a scary proposition.

What drives the business model of your profession?

I consider my profession to be training – I’ve been tutoring, teaching, lecturing, coaching and training since I was 19 years old. My focus for the past 15 years has of course been on internal audit, risk and compliance, but fundamentally I’m a trainer. My business model is often a lazy and reactive one, I have to admit! What I’ve been doing works fantastically, so I haven’t changed it too much. Now, why does it work well? I think because I constantly seek out new information – from colleagues, contacts, clients and elsewhere. I stay as up to date as I can in my professional fields.

Being on the Technical Guidance Working Group of the IIA (UK and Ireland) keeps me on my toes! Our monthly meetings ensure I participate in discussions about hot topics and how they affect internal auditors in different sectors and specializations.

And, of course, I always work closely with my clients both before and after training, to understand their needs, concerns and priorities. This means my view of internal audit, risk and compliance is constantly evolving. I’m very lucky to receive so much information and insight from professionals I work with across the globe. Often their views contradict each other – but this is a valuable reminder that we live in a complex world and have to often reconcile conflicting elements.

What major changes have you seen over the past few years and do you see coming in the next few?

I’d go back to my first point – the beauty of neuroplasticity is that the human brain adapts. However, we have to recognize and work with the changes that result. That also means thinking of – well, I guess you’d call them compensating controls. How do we retain the benefits of how our brains work now, without losing the skills and insights we used to have?

Which of them do you think will be the most impactful?  In the near-term? In the longer term?  Which will be most difficult to navigate and why?

Again, changes to the human brain will affect absolutely everything, now and in the future. I think the most difficult thing will be getting people to recognize the fact, let alone put time and effort into the compensating controls I’ve mentioned.

Where will the resistance come from? Several groups, I think. First, people who’ve never known anything different may see attempts to complement new ways of working with some of the old as the last gasp of the old fogeys. Second, there may be resistance from organizations who prize speed and automation above all – overlooking the fact that human insight and judgment are essential to any sustainable decisions.

This brings me to AI, which is impressive in so many ways. However, my understanding is that we’re not yet at the stage where AI can replicate all the benefits of informed, reasoned human input. It may well happen – I may not be a Luddite, but I’m certainly no tech expert. For now, though, we should make sure that we exploit the best of what technology offers while not losing the human element. I’m not just talking about “soft skills” or emotions – I’m talking about rigorously logical human critical thinking. There isn’t enough of it. Was there ever?

How do you think your profession will have to change to adapt?

Now I’ll claim both training and internal audit as my profession. Covid has of course prompted me to deliver all my training online. While this has worked far better than I could have hoped – the technology is impressive, when it works! – I’ve been struck by the difference the lack of physical presence makes. Even when everyone switches their videos on, and I can see their facial expressions, there’s an indefinable vibe I’m missing, which I know I pick up on in person. So far, I’ve adapted by adding some extra time, so I can ask further probing questions and let their virtual dynamic develop. That may sound hippy-ish, which is so not me. But it’s true. I don’t know what will happen to facilitate the “vibe” in future virtual training – it would have to involve something like sensors attached to people to detect heart rate, wouldn’t it? That would be horrific.

In terms of internal audit, I think we need to focus on filling a gap that was there before Covid. The advent of data analytics and other computer-assisted audit tools, especially for continuous monitoring, had many internal auditors excited. However, one thing I and other speakers at internal audit conferences emphasized was that automating testing and analysis was great, but raised a big question. If you can automate what people traditionally think of as internal audit – counting stuff – then why have internal auditors? The answer, of course, is three-fold. First, internal audit is more than counting stuff. Risk-based internal audit recognizes that just because you can count something, doesn’t mean it counts. Which goes back to the human element, for my second point: that internal auditors must use their insight and judgment in assurance engagements to interpret what the data tell us. Thirdly, this is a huge opportunity for internal auditors to raise awareness of the consultancy side of their role. Not enough people appreciate what an internal audit activity can bring to a business as consultants. And, as we’re usually part of the organization, we have an in-depth knowledge allied to independence and objectivity. You won’t get that with external consultants – no matter how much you pay them.

What advice would you give to anyone contemplating entering or remaining in the profession?

As a trainer, I’d say two things I’ve gleaned over 30-plus years’ experience. First, subject matter expertise is essential. I’ve seen too many teachers and trainers flit from topic to topic, either because of staffing problems or mistakenly believing that a trainer who excels in one area will do so in another. Even if the teacher or trainer is completely deluded about his or her ability to cover the subject, the students or participants won’t be. They can spot incompetence a mile off.

However, expertise – though essential – isn’t sufficient. My view is that people are born teachers or trainers – not made or trained. Recognize your feelings – if you’re uncomfortable teaching or training, do something else. Life’s too short not to. Don’t assume attending yet another course on how to teach will change anything. On the other hand, if you love it, then do it as often as you can, and learn constantly from your colleagues, your students or clients, even your competitors!

As for internal audit – what an endlessly varied career! If people are curious, attentive to detail and enjoy observing what humans do in the organizations they create – well, there’s no better place to work.

Bio:

Sara is an internationally recognized expert in internal audit communications, delivering tailored report-writing and other training to internal audit, risk and compliance teams worldwide (www.saraijames.com).

With over 30 years’ academic, teaching, writing, publishing and corporate experience in the US and Europe, she brings a wealth of varied yet specialist expertise to clients and audiences. Clients include multinational blue-chip organizations in sectors as diverse as finance, oil and gas, pharmaceuticals, technology and aerospace; national and local government; legal and medical professionals; and charities.