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Not a Top 10 List

Blogs Mike Jacka, CIA, CPA, CPCU, CLU Jan 04, 2019

Good news

I'm not going to regale you with a rehash of the past year via some type of top 10/best of 2018 list — top 10 internal audit shops, top 10 auditors you'd like to meet at a conference, top 10 control faux pas that somehow didn't bring down the corporation, top 10 blog posts I shouldn't have posted — you know what I mean. They have their place and can provide a good perspective on where we've been, but I'm not going to go down that road.

Instead, I'd rather do something a little more personal — personal for you, that is, not me. I want to turn the tables and ask you a question. As a professional internal auditor, what was the best thing(s) you did last year? And a related question, what was the best thing(s) your audit department did last year?

Here's a story from the archives. Back in the '90s, Farmers Insurance was owned by British American Tobacco (BAT). (Yes, an insurance company owned by a tobacco company. And, yes, it was as weird as it sounds. And, no, we didn't get a free carton of cigarettes every week.) I can't speak for other departments in the organization, but internal audit learned a whole lot from the partnership. It was a valuable relationship.

The gentleman in charge of BAT's audit department was a challenge…and just a little bit scary. You know what? Let's not sugar coat it — he could be a jerk. (Okay, I did sugar coat it after all. But, seriously, this is a family blog and there are limits.) However, he knew his stuff and he made us think about the work we were doing and how to do it better.

As I said, a valuable relationship.

During one discussion, he asked us to tell him the most impactful things we accomplished in the prior year. Since the crickets who were chirping in the ensuing silence did not provide an answer, one of us finally mentioned that we had been involved in a number of fraud investigations. "How much were the shortages?" he asked. Struggling because we didn't know the answer (a scathing indictment on its own), we finally replied that it had been about $100,000. (We handled a lot of frauds, but they were generally very small amounts.) "So, fraud is the biggest thing you do?" he asked. "Is there anything else?" We couldn't come up with anything we thought would impress the great and powerful CAE. "So," he said, "Your budget of a few million dollars is being spent to, at most, find $200,000."

And there we sat, wondering how we could defend our existence.

Now, a couple of quick comments about the story. I can't remember the exact numbers, so the dollar amounts presented are a guess. But they are close enough to make the point. Further, these are not the exact words that were spoken, but they convey the gist of the conversation. (And I will never forget the half-smile that came upon his lips — contempt, disbelief, the shark coming in for the kill — as our inadequate answers were spoken.)

If you read my blog at all, you have probably seen that a lot was accomplished in the Farmers Insurance Internal Audit department. And I can point to a number of projects I am proud of — ones that did not involve fraud or dollars; but ones that helped make the company better, made client relationships better, and made the department better.

But, in that moment, it was all lost. And that was a shame, because, when that conversation occurred, some of the positive impacts of Farmers Internal Audit were already happening.

I never forgot that lesson.

No department should have to defend itself on dollars earned/saved/recovered/found/grabbed-up-in-a-maelstrom-of-audit-flurries, because that is seldom the most important part of the story. And you have to be able to tell that more important story — the one that truly defines why you are worth every bit of resource you are provided — at a moment's notice.

Maybe make your own top 10 list — the top 10 really nifty things that got accomplished by you/your department. Maybe share them around the department as a reminder that everyone is doing really good work. And maybe have them in your back pocket when anyone asks (ala Office Space), "What would you say…you do here?"

Dollars do not make a successful internal audit department; it is what you do with the dollars you are given. And that is the story to tell.

And here's one more for you…a resolution for the coming year. (And I should make it clear that I absolutely loathe resolutions, so feel free to ignore this advice.) In the coming year, do something — just one thing — impactful; something that you can look back on and say, "I made a positive difference in my organization, my department, my profession, or my life." (Note: that last one is probably the most important.)

Mike Jacka, CIA, CPA, CPCU, CLU

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