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​Four Areas of Focus for Internal Audit

Blogs Mike Jacka, CIA, CPA, CPCU, CLU Jul 16, 2019

At this year's IIA International Conference, Tuesday morning's general session speaker was Dennis Snow, a former leader with the Walt Disney Corp.

The title of his presentation was "Performance Excellence: The Employee Factor" (see "International Conference: Accomplishments, Awards, and Performance Excellence"). Okay, not a lot of impact from that title (even with the name "Disney" attached) but, trust me, this was, all by itself, worth the price of admission. (As proof, I hold before me the largest volume of notes I took during any presentation. Their near-indecipherability will be discussed in a moment.)

A common and important — but far too-underutilized — concept discussed these days is that top performing companies start with a focus on employees, often placing a greater focus on employees than on the customers. And one of the best examples of this practice is at Disney . Dennis provided insights into how Disney (and other organizations) provide excellent customer service by providing excellent employee service.

One of the topics he discussed was Disney's four key focus areas.

(And, at this point, a confession. What follows will not be a word-for-word recap of what was said. My handwriting is often akin to an uncalibrated seismograph. And that means that, while I can unscramble a significant portion of the notes I scribbled, there are some that are untranslatable. For example, I don't think he actually used the term "four key focus areas." However, that is close enough to the truth to be reportable. And so it will be throughout this post. Maybe not a verbatim account, but the crux of what was being said. And, if anyone attended the session and can clear up some of my messes then, by all means, provide those corrections. Take these parenthetical comments as a reminder that every auditor should do his or her best to take notes that are readable. But that's a topic for another day.)

As he started the discussion of the focus areas, he commented that they might not apply to the attendees, implying that these might not match the needs of internal audit. Hold onto that thought as we go through the four areas:

  1. Clearly define the customer experience. For Disney, this means providing a magical experience, ensuring attention to detail, and making people feel special.
  2. Define the terms of service. This includes Identifying how service to the customer and to the employee is defined. It is followed by understanding the frustrations customers face and then doing something about them.
  3. Hire the right people. People are not hired to "fill a gap." People are hired who match the organizational culture. To help solidify the connection, internal processes (hiring in particular) should model the culture of the organization.
  4. Train and communicate ruthlessly. To serve the customer, employees must have as much information as possible and be provided ceaseless training opportunities. (By the way, that word "ruthlessly" is exactly what he said — I know I got that one right.) This includes relentlessly (again, his word) telling stories about the impact employees have had.

He then noted that the overall strategy for Disney is "We create happiness," emphasizing that, while it might feel a bit warm and fuzzy, it was the actual strategy — that Disney literally defines the product it sells as happiness.

Take another look at the above and tell me why they shouldn't be a part of — if not the entire — focus of internal audit. We may struggle with some of the terms, (magical experience? why not?) but a quick perusal will show that these should be at the core of our success, just as they are with Disney.

We need to clearly define the customer/client/auditee experience. And it should include — if not be completely made up of — providing a magical (yes, magical) experience, paying attention to the important details, and making the customers feel special (in a positive way — can't believe I have to add that, but thought I'd better do so.)

We should clearly define, to ourselves, our terms of service for the customer/client/auditee, as well as the terms of service for our employees/auditors. And that includes understanding and overcoming customers' frustrations. (You want a good start? Try mapping the customer journey and look at the obstacles, bottlenecks, and nightmares you make them go through, all in service of providing them service.)

We have to hire the right people. Quit looking for specific skills (accountants, IT, etc.) unless they are really necessary — unless they fill a very specific and large gap. Instead, we must focus on finding people who understand people and processes — who work and play well with others. If the ones we select happen to be accountants, fine and dandy. But most potentially successful employees are lurking in areas where we are unaccustomed or unwilling to look.

And train and communicate ruthlessly. Employees want to know more. And we tend to be so focused on getting the work done (not necessarily getting the work done well, just getting it done) that we ignore the need to communicate what is going on; communicate what is expected; and train, train, train in everything from audit to the organization to things we never thought of before. (For example, how Disney focuses on people and customers.)

We spend a whole lot of time talking about keeping our customers happy. But far too often we take a short-sighted view of what we mean by "customer," thinking only in terms of the board or, maybe, executives. We need to expand our ideas about customer service to the clients and auditees throughout the organization — giving them a magical experience with internal audit.

But that only happens when we provide service to our employees. When we provide service to all auditors within the organization — training, communicating, setting the standards, and making it second nature for them to deliver quality service  — customer service will become a mirror of the service the auditors receive.

Mike Jacka, CIA, CPA, CPCU, CLU

Co-founder and Chief Creative Pilot, Flying Pig Audit, Consulting, and Training Services (FPACTS), based in Phoenix.