Transforming an Internal Audit Department from a Policing Function to a Risk-based / Value-added Function. April 15, 2016

Transcription

1 Transforming an Internal Audit Department from a Policing Function to a Risk-based / Value-added Function April 15, 2016 Presented by Alex Stephanouk, Aflac, Inc. SVP, Internal Audit

2 Presentation Objectives At the end of this presentation, you should be able to: Diagnose a transformation opportunity Develop a strategy and plan for transformation Learn from and avoid my mistakes 1

3 What I was told Poor client relationships Inability to deliver No value in what was delivered Lack of Audit Committee trust Bad reputation Internal Police Dumping ground for problem employees 2

4 Transformation Methodology STEP 3 STEP 1 Assess Assess current state of the Internal Audit Department Identify opportunities for improvement STEP 2 Design Develop a vision of success Develop a strategy to achieve the vision Develop a Road Map to success Implement Execute the strategy Measure success for continuous improvement 3

5 Assess the Current State 4

6 Assessment Criteria People Does Internal Audit have the right people strategy to deliver on the mission / objectives? Process Are the processes enabling and dynamic in meeting business needs? Positioning Positioning Is Internal Audit strategically positioned to contribute to business performance? 5

7 2009 Current State Assessment - People Criteria S t r e n g t h s Diverse mix of skills and experience Ample funding for training and development O p p o r t u n i t i e s Limited soft skills to effectively challenge No clear staffing strategy No defined skills and competencies Rigid recruiting processes No tools for developing team members 6

8 2009 Current State Assessment Process Criteria S t r e n g t h s Leading practice technology platform (workpapers, analytics, knowledge, and GRC) O p p o r t u n i t i e s No defined audit universe No strategic plan Rigid methodology No root cause analysis Limited project management tools No sense of urgency for reporting Weak follow-up procedures 7

9 2009 Current State Assessment Positioning Criteria S t r e n g t h s Reports directly to the Audit Committee O p p o r t u n i t i e s Not welcome on governance committees No link to strategy No respect from senior management Toxic relationships with line management Limited interactions with external auditors No tools to manage stakeholder satisfaction 8

10 Design the Future State 9

11 Vision Mission Strategy Elements Key Focus IA s Vision and Strategy To be recognized, trusted, and valued throughout Aflac Vision To deliver independent, objective assurance and consulting activities designed to add value Mission and improve Aflac s operations People First Attract, Develop, Mentor, Retain Strategy Process Excellence Elements Efficient, Repeatable, Well Understood Audit Methodology, Proper Technology, Supporting Work Papers Key Focus Culture of Quality High Value Assurance, Insightful Observations, Business Minded Recommendations Revisit and communicate about the strategy often Stakeholder Satisfaction Alignment of goals with the Audit Committee, Executive Mgmt, other Risk Management Functions, Auditors, & Regulators Key Measures Open Positions Staff Turnover Rate Placements Outside of Department Quality Scores Budget to Key Actual Schedule Adherence Measures Change Adoption Rate Customer Surveys Return on Investment Customer Surveys Return on Investment Relationship Index 10

12 The Value Loop If you have the right people Following the right process Delivering Value Yields Reinvestment You should achieve stakeholder satisfaction With appropriate quality 11

13 People Transformation Plan Process Redesign recruiting Improve onboarding Develop Competencies Develop Goals Mentoring Program Retention Program Redesign audit methodology and provide training to staff Implement an IA project consulting strategy and process Stakeholders Identify key stakeholders Rate and rank key relationships Increase coordination with external audit team Quality Elevate discussions of Value Increase the use of data analysis tools and techniques Focus on root cause 12

14 People First Process Excellence Culture of Quality Stakeholder Satisfaction 13

15 Achieving the Vision Through a People First Strategy Develop Attract Change the who Skills Knowledge Behaviors Change the how Behavioral interview Selling Aflac Retain Onboarding Coaching /mentoring / training Certifications Pairing auditors Retain Reward model behavior and extraordinary performance Create a positive work environment 14

16 The People First Methodology - Results Allow people to accentuate their strengths Encourage engagement (apply the 30% rule) Team Feedback High Quality Team Survey staff Address problems head-on Fast Growth Manage by objective and hold people accountable Management Feedback Different Feeling 15

17 People First Process Excellence Culture of Quality Stakeholder Satisfaction 16

18 Risk Assessment Determine what s important to our stakeholders Use a project charter Aflac s Internal Audit Methodology Set standards only where appropriate Planning Identify the question(s) we need to answer Make sure the client knows and agrees with the question Process Level Methodology Execution Perform analysis to answer the question(s). Stress tools over Objectives Risks Controls forms Assessment Reporting Report the answer to the stakeholders and any resulting action plans. Keep it simple and flexible Follow-up Avoid protracted review loops Audit needs teeth to drive change. 17

19 People First Process Excellence Culture of Quality Stakeholder Satisfaction 18

20 Internal Audit Principles We are a professional audit practice Presentation Certification Golden rule Collaboration Context Principle 1 We presume that our clients are smart, capable and dedicated Principle 2 Principle 6 02 Culture 05 Our team will have courage to think creatively and not fear failure Principle 3 Principle 5 Principle 4 All audits start with a purpose or question that needs to be answered Process and root cause analysis is our core competency 03 Our goal for each audit observation is positive business change

21 People First Process Excellence Culture of Quality Stakeholder Satisfaction 20

22 We are now recognized trusted and valued!! Survey Results Value-based QAR Results Management Requests Unsolicited Feedback Seat at the Table 21

23 Continuous Improvement Operations Management Recognized, Trusted and Valued Trusted Advisor 22

24 Operations Management Portfolio Mgt. Don t underestimate the importance of this Global Quality Scheduling Tools Global Training Operational Efficiency Effective Reporting Methodology Guidebook Enhanced Automation Meeting Efficiency 23

25 The Push to Trusted Advisor Continue to build a great team: Purpose Play Position Enhance Cross Functional Collaboration Expanding GRC Adoption Responding to Requests Participating in Key Committees Continue to hone operational efficiency Focus on providing insights: Data Analytics Project Monitoring Quarterly Risk Assessment Develop an Education and Awareness Program 24

26 Evolution of Metrics Strategy Elements People First Process Excellence Culture of Quality Stakeholder Satisfaction Original Metrics Open Positions Staff Turnover Rate Placements Outside of Department Quality Scores Budget to Actual Schedule Adherence Change Adoption Rate Customer Surveys Return on Investment Customer Surveys Return on Investment Relationship Index Current Metrics Utilization Staff Surveys Project Evals Certification Rate Quality Scores Budget to Actual Schedule Adherence Change Adoption Rate Customer Surveys Customer Surveys Management Surveys Project Requests 25

27 Key Obstacles/Hurdles/Mistakes I underestimated resistance I underestimated the value of ensuring everyone spoke the same language I assumed everyone was career motivated I underestimated the need for speed to market I over negotiated findings 26

28 Closing Advice 01 Have and set a vision Focus on what you can control Project confidence Never stop improving 27

29 Thank you 28