The Internal Audit as Change Agent

1. The Internal Audit as Change Agent Dr. Peter Kundinger

2. Definition of Internal Audit „Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization‘s operation.“ IIA standards for the professional practice of Internal Auditing

3. Essence of Internal Audit objectives: add value improve organization competencies reviewing consulting individual professional activities

4. Internal Audit objectives • add value • quantitavive • qualitative • improve organization • compliance • control and governance • risk management • economic efficiency • social efficiency • effectivity

5. Internal Audit activities reviewing compliance audit operational audit management audit consulting depending on review independent from review IIA attribute & performance standards objectivity, independence process-orientation professional competency quality

6. Internal Audit as an operational function Internal Audit generate added value improve organization objectives reviewing and consulting activities IA qualification competencies

7. Change and Innovation Standardization Change Improvement Alignment (basic) Innovation The Internal Audit as Change Agent

8. The Implementation of Change Operational Changes nowadays are usually not anymore a result of an isolated innovation moment. Therefore they require a (change) process. Veränderungsprozess Veränderungsprozess Veränderungsprozess Veränderungsprozess Change Process Significant change processes are implemented via (change) projects.

9. Motivation of Change Processes Corporate environment (globalization, competition, technology, regulations etc.) IA and other corporate functions Management Change Process company-internal (restructuring, reorganization, strategy change etc.

10. Requirements to an IA innovation function deriving from fundamental presumptions Internal Audit Innovation and Change generate added value improve organization/ business processes quality control objectivity/independence professional competencies process-orientation future-orientation customer focus corporate dimension innovation-friendly environment structurized handling of change Change Agent competencies stage-orientation goal-orientation stakeholder focus COMMUNICATION AND CO-OPERATION IA innovation function

11. Enhancing IA by the encouragement of Change objective Change activities innovation function competencies Change agent

12. Goals of an Internal Audit as Change Agent Change (Innovation) add value improve an organization‘s processes

13. goal of an IA as Change Agent Change objectives of an IA as Change Agent innovation- friendliness successful change processes

14. The environment of change: innovation-friendliness C H A N G E characteristics Management/Organization Knowledge Culture I N N O V A T I O N corporate level Behavior Individual level

15. future-orientation Management/ Organization employee-orientation

16. future-orientation flexibility • adaptability • variability (temporary/process structures) • debureaucratization Management/ Organization goal-orientation • visions, principles, strategies • management by objectives chance-orientation. • focussing on innovation/chances • management of chances

17. employee-orientation partizipation Management/ Organization confidence personnel development remuneration and incentives communication learning organization

18. acquisition development of Knowledge identification distribution preservation utilization (modular concept according to Probst)

19. Corporate Culture defined as values, standards and patterns of thoughts or behavior, which affect members of an organisation (according to Heinen) integration motivation culture coordination identification corporate climate (confidence, intrepidity, learning) „adhocracy-culture“

20. M/O Authorization K C innovation- friendly Behavior Ability Competencies of a Change Agent Willing will to change attitude

21. synergetic effects of the „CIF“ Management/ Organization C H A N G E A D D E D V A L U E I N N O V A T I O N Behavior Culture Knowledge „C I F“

22. „CIF“ Internal Audit activities M/O B K C support reviewing change processes consulting

23. The Components of the IA innovation function inition function process creation process review initiate accompany analyze completed change processes F/O V and generate resp. ensure W K „CIF“

24. Activities of an IA innovation function Reviewing Consulting Reviewing ITF PCF PRF IA attribute & performance standards objectivity/independence quality professional competency process orientation

25. The inition function (ITF) passes the stages of a reviewing process and completes its preparation analysis output by the following operations focussing audit activities on innovation potentials accelerating fundaments for decision-making searching for innovation potentials prioritizing of main audit objects

26. focussing audit activities on innovation potentials M/O hard facts B K IA as Change Agent reviews C HR processes soft facts

27. The process creation function (PCF) passes typical stages of a (change) project and completes consultatively its planning/preparation realization termination by the following operations environmental analysis communication project organization team developmt. project-immanent controlling ensuring support problem solving effective creation of selective measures formal project termination generate/ensure CIF

28. The process review function (PRF) passes the stages of a review process and completes its analysis output by the following operations reviewing economic and social efficiency reviewing effectivity adjusting the regulation framework change process inition function accelerating fundaments for decison-making continuous improvement process

29. „CIF“ Internal Audit competencies M/O B K C individual support professional change processes Change Agent competencies

30. Change Agent competencies inition function process creation process review knowledge of CIF as well as of HR processes change/project management structurized idea generation and potential-orientation cooperation and customer-orientation handling of uncertainties individual Change Agent competencies

31. the IA as co-operation partner imparts receives Knowledge by information conver- sation mode- ration teaching transfer via interaction

32. individual Change Agent competencies characteristics hardly learnable individual attributes like e.g. pro-activeness, creativity, courage, will to learn, intuition, improvisation, tolerance • knowledge • expertise • experience emphasized by skills like e.g. ability to communicate/ integrate, persuasiveness, inter-cultural cooperation flowing into

33. innovation function: integration into IA Innovation function integrated Internal Auditing innovation- friendliness, successful change proc. adds values improves operations objectives Inition function PCF PRF reviewing and consulting activities competencies Change Agent IA qualification

34. The value-adding impact of innovation innovation Added Value innovation -friendly environment value-adding environment pace learning rate quality M/O B K C Change Agent value-adding resources

35. innovation-friendliness and its contribution to added value Management/ Organisation A D D E D V A L U E process pace Behavior Culture learning rate Knowledge quality

37. IA as Change Agent Conclusion: By assuming the Change Agent role the Internal Audit function supports successful organizational change. Thereby Internal Audit generates added valueand thereby contributes to company‘s long-term survival