The Partnership Paradigm: How Internal Audit and Auditee Collaborate for Success

"An environment that is not safe to disagree is not an environment focused on growth – it's an environment focused on control." - Wendi Jade

As we navigate the complexities of modern business, this quote rings especially true for the field of internal audit. Surprisingly, many still perceive internal auditing as a function stuck in its transactional and compliance-oriented past.  What they may not realize is that the practice has made leaps and bounds over the decades.

For those unfamiliar with internal auditing, think of it as the coach of a sports team. Just as a coach assesses players' strengths and weaknesses, strategizes, and helps the team improve, internal auditing evaluates an organization's processes and recommends ways to optimize them. It's a continuous loop of assessment and improvement, aimed to keep the team— or in this case, the business— at peak performance.

From being solely risk-focused, internal audit has transitioned into a partnership mindset with organizational departments.  The recent update to the Three Lines Model is a testament to this, emphasizing the need to break down silos and integrate functions across an organization for more effective governance. 

Understanding this evolving landscape isn't just academic; it's critical for success and continuous improvement in today's fast-paced business world 🚀 But even in this advanced landscape, internal auditors and auditees can be at a rift with each other. So, how can these gaps be identified and addressed to ensure a collaborative and effective auditing process? Let's dive in and find out. 

Let's explore seven common scenarios that lead to a psychological gap between auditors and auditees. We'll delve into actionable suggestions to build a relationship rooted in trust and collaboration. 🤝

The scenarios and characters depicted in this article are fictional and for illustrative purposes only. Any resemblance to real-life persons or incidents is purely coincidental 😊

Scenario 1: The Relentless "Why?"

The Story: Ingroup-Outgroup Bias

You know how children often ask "Why?" relentlessly? Many auditees feel the same way when internal auditors start their inquiries. This creates a psychological tension that hinders open communication.


Auditors, don't just ask "Why?"— explain that each question is a stepping stone towards collective improvement. 🛠  

Auditees, see these questions as opportunities for betterment, rather than critiques. 🌱


Scenario 2: The Disarming Silence

The Story: Ambiguity Avoidance

Picture this: Fida starts to feel uneasy as Shahmeer, the auditor, quietly sifts through his department’s documents. This silence leaves him wondering, "What is he really thinking?"


Auditors, maintaining open lines of communication is key. Frequent periodic updates can ease tension and encourage dialogue. 💬  

Auditees, remember that silence is a natural part of the process. Don't equate it with judgment. 🤷


Scenario 3: "Don't Speak, The Auditor is Here!"

The Story: Collective Anxiety

When Wali, the internal auditor, walks into the room, everyone suddenly clams up. The atmosphere is thick with unspoken tension.


Auditors, try to be more approachable. A smile or a bit of small talk can ease the room’s tension. 😊  

Auditees, understand that auditors are not the enemy. They’re here to help, not to harm. 🤗


Scenario 4: "We Don’t Need Auditing"

The Story: Status Quo Bias

Humaira learns that the Treasury department is part of the audit plan. She reaches out to Head of the Department saying "Internal Audit is going to waste time, we're already performing well."


For Auditors: Emphasize that your role in internal audits is not just about pointing out flaws, but offering constructive feedback to foster improvement 🎯  

For Auditees: Keep in mind that high performance isn't a guarantee of strong internal controls or low future risk. Fresh perspectives can offer invaluable insights for ongoing success 🌟


Scenario 5: The Quest for a "Clean Report"

The Story: Selective Perception

Zobia is laser-focused on getting an audit report without any flaws, underlining only the department’s successes. She is telling all her direct reports that there should be no non-compliances in the audit report.


Auditors, inform the auditees that reports will cover both positive and negative aspects. Aim for a balanced view that reflects reality. ⚖  

Auditees, see audits as not just pass-fail tests, but as stepping stones to continuous growth and improvement. 📈


Scenario 6: An offense is the best defense 

The Story: Gaslighting 

Sana, a diligent internal auditor, uncovers irregularities in the procurement process. When she reports her findings, the Chief Procurement Officer, Mr. Ali, insists she must have misunderstood the data and suggests she might be too inexperienced for such complex analysis.

The Psychology:

Mr. Ali's comments are a subtle form of gaslighting, intended to make Sana question her competence and the accuracy of her report, potentially creating a toxic work environment where auditors feel undervalued and mistrusted.

The Lesson:

For auditors: Believe in your skills and reaffirm your findings with evidence. Seek peer reviews or a supervisor's input when facing such pushback. It’s important to cultivate a supportive network that reinforces psychological safety. 🤝💪

For leadership: Addressing audit findings with skepticism can be valid, but it should be done constructively. Encourage a culture where questioning is for clarification, not intimidation, promoting a safe environment where all colleagues feel respected and heard. It helps to have guidelines for auditees to understand and contribute to the internal audit reports. 🏢🗨️


Scenario 7: Silent treatment

The Story: Mixed Signals

Ahmed, the head of the finance department, feels the audit went smoothly. Sarah, the internal auditor, never raised any concerns during her visits. So, when Ahmed reads the final audit report and finds a slew of negative observations, he's taken aback. The language in the report doesn't mirror Sarah's earlier demeanor at all. As a result, Ahmed becomes hesitant to openly share information with internal auditors in the future, questioning the true collaborative spirit of the audit process.

The Psychology:

This is an instance of what psychologists call "Incongruence," where there is a significant disconnect between verbal and non-verbal communication, leading to mixed signals and mistrust.

The Lesson:

For auditors: Transparency is key. If you spot potential issues, it's beneficial to communicate these early on. This not only manages expectations but also might offer the auditee the chance to provide necessary context.  

For auditees: Don't hesitate to ask for preliminary findings or areas of concern during the audit process. An open dialogue can clarify any ambiguities and prevent unwelcome surprises.