As Newly-elected officials transition into leadership — where does that leave internal audit?
By Mark Maraccini, CPA, and Susannah Heitger, PMP
With another November behind us, we see another round of transitions in leadership positions across local government agencies. This “changing of the guard” in our public sector organizations comes with the territory and seasoned internal auditors will know to keep marching and brace themselves for the unknown transitional period ahead. Each new elected transition can bring pain, promise, steps backward, and/or a launchpad for incredible progress. How can internal audit proactively manage leadership transitional periods with sensibility, independence, and success?
Internal audit can identify new threats with incoming leadership due to suddenly cancelled projects, abandonment of core programs, de-funding of services, poor investments, and avoidance or even ignorance to governmental realities that past leaders were addressing — such as in finances, operations, technology, and more. On the contrary, new leadership can equally usher in welcome change, advancement, new ideas, new thinking, new skill sets, and innovation. They may come with new understanding of existing issues, and new solutions and resources as well. So this risk is inherent; but how can we maximize opportunity and minimize the threat?
Undoubtedly, elections that bring new leaders impact the internal audit function of any local government organization, for better or for worse. The key may be twofold — getting their attention, and staying focused on the message.
First, brace yourselves — internal audit is probably not on the top of the list for most newly elected officials. Though shocking as this may seem, it is likely not in the top 5, or even top 10 priorities. They ran on platforms with mission-focused priorities, and have campaign promises to fulfill when arriving into office. They are energetic, motivated, and passionate about visible change from the onset, and internal audit can play an important role that could either deflate their idealistic views or be a catalyst for change and improvement. Success lies in the approach. Therefore, we have provided some helpful tips below to help you through this transition.
TIP 1: GET ON THAT SCHEDULE
The schedule of any elected official is packed — and a newly elected leader’s calendar is actually worse. Therefore, waiting around for the chief of staff or aide to call upon internal audit for an introductory meeting only guarantees a spot at the end of the line in funding, attention, and action. Get on that schedule immediately for a one-on-one. Exhibit urgency and persistence. Approach with seriousness and specific talking points, rather than approaching as a casual “meet and greet” or get-to-know-you meeting. Demonstrate that you come with a message and mission to deliver, and are ready to collaborate. Respect scheduled time blocks through succinctness. Make yourself available and flexible, expecting reschedules. Bottom line: it is your mission to get in front of new leaders.
TIP 2: SPEAK THE LANGUAGE AND MANAGE THE MESSAGE
Now that you’re there, you must manage the message and value proposition of the internal audit function. You must concisely explain the function, its criticality, and the key in-flight initiatives and successes — all in simple non-audit language. Recognize the skillset of the individual, which is unlikely in accounting or auditing. Aim the messaging in a way that is practical and focused on how internal audit drives results of the organization. Ask for support and partnership, and show them how a greased internal audit machine helps keeps risks mitigated, and supports a healthy organization. Become the indispensable internal audit function that saves on cost and reduces risk and mostly importantly will make their lives easier. Bottom line: it is your mission to communicate internal audit value, in their terms.
TIP 3: DOUBLE-DOWN ON OBJECTIVITY & INDEPENDENCE
It is easy to get caught up in the whirlwind aftermath of an election. It may not just bring new elected officials, but their corps of associates may drop into newly-created positions, replace and demote department heads, reassign tenured civil servants, and generally just shake things up both figuratively and literally. This is the time to double-down on what makes internal audit so important — objectivity, independence, and strict adherence to standards. Intentional or not, this is where new officials and their staff may be seeking commitments to outcomes, program partnerships, and support on specific initiatives. Though inadvertently, they may seek accountability in a misguided way, by seeking internal audit “support” and sending, diverting, or recalling directives regarding internal audit functions and activity. Intentional or not, they may seek information that should not be shared, and misinterpret it. Your role profile may be challenged and stretched into territory not in scope for internal audit. It is a slippery slope seeking to be noticed and understood by new leaders, without impairing any objectivity. Helping them understand the professional guidelines you are required to follow and how these guidelines help provide objective and unbiased assessments of the government. Bottom line: it is your mission to remain singularly-focused on Internal Audit independence, and modeling its importance through your actions and leadership.
TIP 4: EDUCATE & RE-EDUCATE
This is a lesson in constant education and re-education about internal audit. If you are a career internal auditor, you will be preparing, delivering, following-up, and updating the messaging about what internal audit does and doesn’t do, over and over and over again. You may as well embrace it now. Intentionally focus on this and create clear, visually attractive, relevant presentation content you have at your fingertips when the opportunity arises. Create versions that are tailored for various audiences — such as elected leaders, board members, department heads, functional SMEs, partner agencies, citizens, and more. Be ready to educate, and be happy to educate. Be prepared for the fact that the messaging and reporting that worked before, may not achieve the same results now. For example:
- What does internal audit mean?
- What is our purpose?
- What is external vs. internal audit?
- How is it funded?
- What is NOT internal audit?
- Who does IA report to?
- What are the top 5 trends?
- What are the top 5 things they found in the last 5 years and what was the organizational impact or risk avoidance?
- What are the top 5 initiatives in progress?
Most importantly, learn what is important to your organization and prepare a presentation that addresses that topic and its intersection to internal audit. For instance, it could be tight budgets, deficit spending, equity, fraud, service demand, population change, and the list goes on. Internal audit touches everything, and is relevant everywhere — but it’s up to you to drive the education process, and how effective you were in educating others can impact your program. Conversely, educate yourself! Identify, research, and learn the priorities of new leadership, and be proactive in understanding the risk (or opportunity profile) of each. Bottom line: it is your mission to educate others, and your resources may depend on it.
Local Government structures and processes continue to modernize and evolve, but they remain as critical as ever to delivering services and supporting communities in innovative ways. So too is internal audit — it must modernize and innovate, but remains a core function of critical importance to the health of the public sector. It’s up to you to identify, communicate, and manage this messaging in order to best capture the most opportunistic risks of newly-elected transitions and minimize the threats.
ABOUT THE AUTHORS
Mr. Mark Maraccini is a lead partner for providing risk and internal audit services to public sector entities. Mark has over 19 years’ experience working with public sector clients (governments, not for profits and institutions of higher education) on internal and external audits, Federal and state compliance services, risk management services and quality assessment reviews. Mark’s experience has provided him with a deep specialization in internal control over financial reporting and compliance, and in the implementation of Enterprise Risk Management programs.
Mr. Maraccini has recently presented at the international IIA conference on Building a Sustainable ERM program. Mr. Maraccini also presented to the Texas Association of School Business Officials on Quality Assessment Reviews of the Internal Audit function and served on a panel for the IIA and Association of Government Accountants related to risks surrounding governmental internal audit division.
Mark has worked extensively with governmental and institutions of higher education conducting risk and internal control assessments. Mark has also conducted numerous single and compliance audits which helped lay the foundation for understanding internal controls and risks surrounding financial reporting and federal compliance. Over the past 7 years, Mark continued to expand his breadth over risks assessments with a focus on Enterprise Risk Management (ERM).
Susannah Heitger is a Senior Manager in Crowe LLP’s Public Sector Consulting practice, and has consulted a variety of public sector organizations for 14 years, based in Chicago. She specializes in helping state and local level public sector organizations manage transitions, reduce risk, optimize budgets, embrace change, and increase performance, which includes developing strategy, implementing technology solutions to improve efficiency, and working to solve complex problems that impact constituents.
Within the public sector, Susannah has built niche specialty with large criminal justice & public safety agencies, economic development authorities, and local government Finance & IT. She is also the new product development innovation ambassador within Crowe, working to build product solutions for public sector markets.
Susannah has a Master’s in Public Affairs / Economic Development from Indiana University SPEA (2006) and a Bachelor of Science in Public Affairs / Public Management from Indiana University SPEA (2002). She is a certified Project Management Professional (PMP) and Agile Certified Professional (ACP).