Internal Auditors as Change Agents

Details

Supervisors

Sarens, Gerrit ; Kuhner, Christoph

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion

Abstract

The study focuses on the empowerment of internal auditors as change agents through a qualitative investigation of the actions and the benefits. The study summarises the issues encountered in the incumbent IA profession and reviews systematically the change agent literature. Moreover, the two literature categories are cross combined and they are used to explore the similarities between internal auditors and change agents theoretically and practically. Interviews with internal auditors from 9 international companies were conducted in order to inquire about their opinions as the practitioners as well as collecting the best practices. Based on the extended data analysis, the findings from literature and the interviews show that internal auditors as change agents can mitigate IA issues in several fields: First of all, in the IA standards. Internal auditors can facilitate the compliance of the IIA standards and the migration from COSO 1992 to the COSO 2013 internal control framework. IA professions and standard setters should also seek a foothold in governance. Secondly, in the independence. Internal auditors could increase their publicity in the changing environment in order to collect adequate relevant information to complete the assessments for all key risks. They should educate and prepare the stakeholders on risk management, governance, and internal control along with the planned changes. Both ways could consequently ease the dual reporting lines issue. Communication regarding the expectations and feedback of assurance and consulting activities from the stakeholders should also be enhanced by the internal auditors. In addition, they should utilise limited resources effectively to achieve the best outcomes. The third is in the assurance and consulting roles. Internal auditors are supposed to apply the correct audit procedure rather than the most favourable ones. They should act as educators and mediators in assurance activities to reduce the risk gaps between the management and the AC. In the meantime, the need to participate in consulting activities should certainly not be ignored. The fourth is in value adding and effectiveness. Internal auditors ought to increase the capability of giving relevant recommendations and following up closely on the assurance activities. The fifth is in the IA competency. Internal auditors should be knowledgeable about the IA and comprehend the business of their auditees. Furthermore, they should be agile and well prepared to embrace the changes and challenges. Internal auditors as change agents come with a cost on workload and resources. But the study argues that the independence of internal auditors will not be damaged by performing certain change agent activities since the activities are substantially encouraged by the IIA standards. Therefore it can be concluded that internal auditors as change agents is reasonable and beneficial for the company, for the internal auditors and for the employees.