Skip to Content

Mind of Jacka: Transformed by the Process

Blogs Mike Jacka, CIA, CPA, CPCU, CLU Jan 13, 2022

Let's start with a quick, easy question. What are the three components of every process?

I ask this in training sessions, and it is interesting how participants are stymied. I think it is because they are looking for something deep and profound. All I'm asking for is the most basic information.

So, having given you a little time, did you come up with the answer? Think back to your introduction to the concepts of "process" (probably in college) and you may remember that a process is usually defined as having three components: input, action, and output.

There it is. About as basic as you can get.

However, this description has a serious flaw. Yes, every process is made up of actions. But a better word to describe what is going on between the input and output is "transformation." The input goes into the process where steps/operations/manipulations/efforts are taken to transform that input into something different — the output.

Redefining process so that we move from thinking in terms of action to actual transformation is not just splitting hairs. This redefinition allows for a better understanding of why the process exists and the value that should be inherent in the process. And if the input is not transformed — if the output is identical to the input — then there is no process. Instead, there is work, there is a waste of time, there is stuff happening, there is sound and fury signifying nothing…there is all of this, but there is no "process."

Here's an easy finding for you. First thing in any audit, take a look at the processes. If you see inputs where no transformation occurs once the work is done — outputs that look like the inputs — then suggest the process be eliminated. When you can start out an audit by showing the client steps that can be eliminated, then you will open doors you never knew were closed.

All well and good. And a quick and wonderful lesson about how to add value while performing audit work. But there is something else important in all of this.

Back in 2020, I came across this line in the comic strip "Macanudo" by the cartoonist Liniers.

If a book is extraordinary, it is started by one reader and finished by a different one.

I've never heard this thought expressed quite this way. But it is a perfect articulation of what should happen to any of us when we read something extraordinary. In fact, I would say that by reading even the ordinary we are changed.

Input – transformation – output.

So, here's a question to get this rolling. When the client gets through all the audit work — when they see the report and the results — do they think that what they have seen is extraordinary?

Okay, maybe a bit of a stretch (a stretch worth stretching for, I might add), and not the point I'm trying to make. But, even if the audit work is only ordinary, there is still a fundamental question that should underlie what has occurred. What or who has been transformed?

An audit is, effectively, a process. There are a lot of different inputs. (For extra credit, I'll let you put together a potential list.) We take those inputs and transform them into results. Those results — reports, meetings, intangibles — are the output of the audit process. Input – transformation – output. And it doesn't matter if the audit is extraordinary, kinda-ordinary, or just ordinary; there should still be some transformation. And those transformations come at three different levels.

First, the area under review should have been transformed. This may seem to go without saying, but let's say it anyway. Further, the single most important objective of any auditor should be to make things better. We may not state it that way, but it is what we ultimately want to achieve. So the area under review should be transformed by being made better. And even if our work results in a clean report, we should be leaving those involved with a stronger sense of assurance that controls effectively ensure the achievement of objectives. A small transformation, but a transformation, nonetheless.

The second transformation shifts our focus away from the area being audited to the people being reviewed. How was the client transformed? Of course they now have the assurance spoken of above But how else have they been affected? Do they have a better understanding of what internal audit is all about? Do they have a better picture of how their department fits within the organization? Do they now understand the impact of their objectives on organizational success? What have they learned that the didn't know before? How will they do things differently — not just related to the audit, but to the department, to the organization, to everything — because of the experience they have been through? If we are effective, we should have an impact on the client beyond the results of the audit. And that is a transformation we should be striving for.

And finally, how were you, the internal auditor, transformed? What did you see, what did you learn, what came from the experience that will make you better? Every project, every audit, every review, every consultation, every big or small task is an opportunity for growth — for transformation. And you have to look at every job as a process — one that is taking you, the input, and causing a transformation. Now, every transformation is not necessarily good. Bad experiences transform us as significantly as good ones. So it is important to recognize that transformation will occur and manage that change. Look around, see the inputs around you, manage your transformation, and control the output that is your change.

Next time you get handed your assignment — whether it be as high-flying as a review of the organization's strategic direction or as petty as a petty cash audit, be aware of what will make the process, the client, and yourself better. And strive for transformations that will make that happen.

If an audit is effective, it is started by one auditor and finished by a different one.

Mike Jacka, CIA, CPA, CPCU, CLU

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