Defining Internal Audit Value

Defining Internal Audit ValueThis is the first in a series of articles on value. This article will focus on defining value from the internal audit perspective.

 

 

The Institute of Internal Auditors (IIA) defines audit as:

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. tweet

I personally love this definition. It touches on every part of what we do and how we do it. It is so good, I share it with every client for each engagement. But I think it is worth noting that some terms in the definition may need more clarity, especially the word, “value.”

The Merriam-Webster Dictionary defines value as:

1: a fair return or equivalent in goods, services, or money for something exchanged tweet

2: the monetary worth of something tweet

3: relative worth, utility, or importance <a good value at the price> <the value of base stealing in baseball> <had nothing of value to say> tweet

Maybe it is just me, but none of these really seems to fully capture how I view value when talking about the internal audit activity. I’d like to take a few minutes to address each of these.

1: a fair return or equivalent in goods, services, or money for something exchanged – When we’re focused on building a world class organization, can we really only deliver a fair return? Or do we want to provide more for good, services or money exchanged? Shouldn’t internal audit, like any other business venture have an ROI?

2: the monetary worth of something – This definition seems to sell short some of the best that we bring to our companies. How many important activities would you forego when it doesn’t offer direct monetary return? Yes, most of us are working for for-profit and/or resource limited organizations, but if we allow ourselves to focus solely on monetary benefit are we really giving our organizations what they need?

3: relative worth, utility, or importance – Now this one is a little closer to a true hit on internal audit value. Worth, utility and importance are all part of it. Value is the provision of something to the company. What we do should matter.

So, what is the definition of value as it relates to internal audit? Here is my swing at it:

Internal Audit Value – Services that improve the likelihood all stakeholders will meet or exceed their objectives.

I’m going to close with that. I welcome your comments on this definition. Does this resonate with you?  Please let me know.

 

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