Adding Value

Posted By: Risk Officer

Adding Value - 07/17/04 03:58 PM

We use "adding value" very freely these days in regards to the internal audit function. Consider the following thought-provoking question: In the past year, what are the three most significant audit recommendations you made that added real value to your organization?
Posted By: AnnRoy

Re: Adding Value - 07/19/04 02:38 PM

I guess I could be cynical and state that most often mgmt. doesn't want to admit when there's a problem in their area or try to minimize the "finding" by stating they will accept the risk-- rather than implementing any recommendations from the auditor UNLESS it's a regulatory requirement that can't be argued with (but even then, the regulatory requirements are debated as well!).

Do you see the trend of internal auditor's performance evaluations tied to "added value"?
Posted By: Countess Kiwi

Re: Adding Value - 07/19/04 04:00 PM

Reviewing procedures to see if there is a different method to save the employees time is one area where audit can add value.

Recently in reviewing charges on statements, we added monetary value by pointing out the duplicate charges by departments due to some miscommunication. Procedures have been enhanced to save the bank the money going forward.

Maybe not three areas, but just some quick thoughts.
Posted By: Risk Officer

Re: Adding Value - 07/19/04 06:31 PM

Quote:

Do you see the trend of internal auditor's performance evaluations tied to "added value"?




In community banking, I wouldn't exactly say there is a trend in this regard. We are seeing, especially as the bank size increases, there is more of an expectation to add value. And there is also a correlation between those internal audit managers that spend part of their time in a "consulting" role or otherwise add value and their compensation. Those audit managers / shops that tend to focus on traditional audit procedures / checklists are generally compensated less.

Back to the original question about stating three recommendations in the past year that truly add value to the organization...most of the auditor we talk with have trouble with coming up with even one. It appears that the focus is on just completing the audit schedule and traditional audit procedures / checklists and moving on. Not much thought is given to the organizations objectives, the bottom line, etc.

Food for thought...
Posted By: EdOils

Re: Adding Value - 07/19/04 08:01 PM

While I can't think of three specific items, I attempt to play the "consulting" role when discussing audits with managment. I am constantly trying to improve procedures and processes as I come across them. However, occasionally, I run across a manager or dept head that is resistant to change. Their philosophy is "This is how we've always done it. Why change?" Luckily, these people are not the majority in our organization.

My thought is "Let's try it for awhile. If it doesn't work, we can always go back to the old way." Now, the majority of my recommendations may not directly impact the bottom line, as they are more indirect. However, I agree that auditors should make these types of recommendations. I also agree that the more improvements that you make will be noticed by Management and the Board. Hopefully, this results in better raises and bonuses. I'll know better at the end of the year.
Posted By: wlavoie

Re: Adding Value - 07/20/04 05:15 PM

If you are specifically looking at the bottom line - Audit performs services such as ensuring service charges are not being waived for selected customers, reviewing expense reports for bogus expenses, and ensuring accounts payable is not paying checks/vendors that are not legitimate. Other areas of possible $$ savings include fixed assets, prepaid expenses, and the entire general ledger. However, I see audit's greatest benefit in the consulting/training arena. How many banks have some form of a trainer position? Are they asked to justify their value? No, because it really can't be quantified.