Doctors are needed not only when people get sick, but throughout life, they help people live longer by preventing them from diseases and unhealthy behaviours. They give their clients advice on balanced diets and check their patients frequently to diagnose problems in their early stages. It is easier to tackle health complications in their early stages before they have caused much damage to the body. Because of their roles, family doctors are very important to their clients.
Internal auditors are the doctors of organizations. They prevent organizations from conditions which may bring adverse impacts to the organizations’ objectives. They also help organizations safeguard assets, operate effectively and efficiently, comply with laws, regulations and contracts and report reliably to the people with interest in the organizations
As doctors do to individual patients, so do internal auditors to the organization. They have an involved role in maintaining the health of the organization. Their work is to ensure that managers in takes necessary steps to prevent events that may hinder achievement of their objectives. In so doing they improve the chances of everyone in their sections achieving their targets, and the organization as whole achieve its objectives. In return, managers and their colleagues get bonuses.
For internal auditors to do their job effectively they have to be involved from the beginning. They should participate in an advisory role during strategy setting so that they can advice in advance on risks and controls related to the strategies set. Auditors tell managers whether the strategies are controllable or not; whether the risks they are taking are acceptable or not.
Because of their independence and insight, auditors evaluate the implementation of the strategies. They also assess immerging risks which may not have been captured at the start and advice managers respectfully.
As our patients, organization management are encouraged to use the opportunity to involve auditors in their decision making process to get an advantage of ‘’a second eye”. Auditors and managers can work as partners in achieving the organization’s goals. Auditors can consult the organization pricelessly.
What should managers ask about a finding?
Management have the right to receive value for their time spent engaging with the auditors during an audit. They have the right to know not only the issue that the auditors found in their work, but also the actual cause of the issue. It is one thing to know the issue, but in order for management to resolve it they must be able to deal with the root cause of that issue. In establishing the root cause, the auditor must engage management in asking questions that will result into identifying the true cause of the issue. (What? Who? Where? And how are we fairing?)
The auditor also should indicate the consequences to the company if the issue is not resolved. Some consequences could be quantified but most of them are not. Example the financial impact of a fraud can be measured in terms of the amount that will be lost when fraud occurs, but other impacts including employees’ morale and the damage to the image of the company cannot be quantified but can prove to be significant to the company for a long time. Therefore, management have the right to know the consequences of them not taking appropriate actions to resolve an issue. (So what?)
Then what? Managers should be able to ask auditors what they think should be done to resolve the issue. Auditors should present management with doable cause of action that will result into resolving the issue completely. In providing their recommendations on the cause of action to be taken by management, auditors must consider the resources available to management and the time needed to resolve the issue. Therefore, management have to be involved as well by agreeing or disagreeing with the proposed cause of action. Both the manager and the auditor should be able to see the issue using the same eyes, and be interested in resolving that issue.
In summary, internal auditors help management in maintaining the health of the organization by identifying the events that that can cause the organization to achieve its goals.
Auditors will better provide that help if they participate in the decision making process from the beginning as a consultant or an advisor. Auditors help management to balance their desired goals with the required safeguards to ensure achievement of their goals
Internal uditors help management to investigate for fraud, in that they conclude whether suspected culprits indeed committed fraud or they did not.
Internal auditors also help management by evaluating whether they are heading in the right direction. They also inform the board of the results of their evaluations and give the board comfort over the health of the organization.
The organization will be healthy if the resources vested by various stakeholders are safeguarded, the operations are conducted successfully and capably; the organization is operated in compliance with laws and regulations; financial and operational information given by management are reliable.
By Chemo Ales Mutani
Senior Internal Auditor
AAR INSURANCE TANZANIA
