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Most read paper 2017 – Thank you !

11 Dec

Lenz, R. and Hahn, U. (2015), A synthesis of empirical internal audit effectiveness literature pointing to new research opportunities, Managerial Auditing Journal, Vol. 30 No. 1, 5-33

http://www.emeraldinsight.com/doi/pdfplus/10.1108/MAJ-08-2014-107

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ECIIA 2017 in Basel

17 Mar

ECIIA 2017

I look forward to attending the forthcoming European Conference of the Institute of Internal Auditors (ECIIA) in Basel from September 20-22, 2017.

ECIIA Conference 2017

I plan to speak about:

SUCCESs – Simple, Unexpected, Concrete, Credible, Emotional, and Stories

SUCCESs

 

 

 

Fresh article about internal audit effectiveness – 50 downloads FREE

3 Feb

50-second-timer

Lenz, R., Sarens, G. & Hoos, F. (2017), Internal Audit Effectiveness: Multiple Case Study Research Involving Chief Audit Executives and Senior Management, EDPACS, 55:1, 1-17

50x FREE ACCESS to: LENZ, SARENS & HOOS (2017), EDPACS, 55:1, 1-17

Abstract

The focus of this study is the relationship between Chief Audit Executives (CAEs) and Senior Management (SM) and its relationship with internal audit (IA) effectiveness. The study reveals differences between more and less effective IA functions and offers explanations by studying organizational, personal, and interpersonal factors within the German corporate governance context. The findings show that the pattern of interaction between CAEs and SM are a key determinant of IA effectiveness. This study highlights the danger of viewing customer satisfaction as the key measure of IA effectiveness since in practice expectations can vary significantly and as sometimes very little may be demanded. Moreover, CAEs typically adjust to expectations, upward and downward. CAEs can drive the agenda as well. When it comes to personality factors, “Fingerspitzengefühl” and swimming in the organization characterize the successful internal auditor. IA designations for CAEs were not found to be of added value. At organizational level, the findings show that companies that are considered as “hidden champions” demand and benefit from effective IA practices.

Keywords: internal audit, effectiveness, organizational factors, personal factors, interpersonal factors.

 

Additional author information

Rainer Lenz, PhD, CIA, QIAL, CIIA, is a seasoned financial and audit executive with over twenty years of international experience in global organizations.

Gerrit Sarens, PhD, CIA, is full professor in audit and governance at the Louvain School of Management (Belgium). He is the author of several books and articles on internal audit.

Florian Hoos, PhD, is assistant professor in accounting and management control at HEC Paris (France). He has won numerous awards, including the nomination as one of the worldwide 40 best business school professors under 40.

 

ACCEPTED MANUSCRIPT LENZ, SARENS & HOOS (2017)

 

Tags: effectivenessInternal Auditinterpersonal factorsorganizational factorspersonal factors

Offense wins games, defense wins championships

4 Nov

 

offense-defense

Lyons, Sean (2016): Corporate Defense and the Value Preservation Imperative: Bulletproof Your Corporate Defense Program, Taylor & Francis Group, ISBN 978-1-4987-4228-3

https://www.crcpress.com/Corporate-Defense-and-the-Value-Preservation-Imperative-Bulletproof-Your/Lyons/p/book/9781498742283

sean-lyons-2016

Book review by Dr. Rainer Lenz, Frankfurt/Main, www.drrainerlenz.de

Offense wins games, defense wins championships

Sean Lyons published this new book in September 2016. I happily share my token of appreciation by providing a little book review. Sean introduces the terminology of “corporate defense”. His reference to the old sporting aphorism that “offense wins games, defense wins championships” is a helpful analogy. In order to win a football game the team has to score one more goal than the opponent. What seems to make good sense in sports, may work in business, too. Modern play seeks to incorporate offense (value creation) and defense (value protection) in all actors – with complementary roles. Sean is looking for the ideal mix between offense and defense, the “golden mean”, the healthy balance. Moreover, Sean diagnoses a defense deficit in many organizations. With that starting point, Sean views the Three-Lines-Of-Defense-Model (3LoD), the current paradigm, as part of the problem, not part of the solution. I fully concur with that. Viewing, for example, the genesis of major banks, the Deutsche Bank in Germany or Wells Fargo in the US may serve as prominent case studies, using that model, it seems that this model may have promoted a misleading sense of security. The model exclusively talks about defense. The model seems to ignore the human factor. The model seems to be an undue simplification. Consequently, the 3LoD-Model is not relevant in many organizations outside the banking sector. Time is ripe to overhaul the 3LoD-Model. I am fully on-board with that ambition. Having diagnosed the shortcomings of the 3LoD-Model, Sean suggests his five lines of corporate defense, (1) the operational line management, (2) tactical oversight functions, (3) independent internal assurance, (4) executive management, and (5) the board. Similarly, the draft King IV report on Corporate Governance for South Africa expands the 3LoD-Model to five lines of assurance. Sean offers a detailed roadmap to put such a system in place. That deserves much credit. The approach suggested may be perceived as theoretical in parts, it may be too complex for many, and it may only be relevant for very big organizations. I personally doubt that adding more lines of defense per se will be the best solution to address the fast evolving risk universe organizations are facing. Sean also acknowledges that consideration and advocates an integrated perspective, integrated thinking at the end of his book; rightfully so. I see the main value of Sean’s book in detailing the various elements of “corporate defense” (e.g. governance, risk, compliance, intelligence, security, resilience, controls, and assurance) and in demanding an integrated approach, also including the offense side of the corporate agenda in order to strengthen corporate governance. In doing so, Sean’s book may become a stepping stone for corporations introducing the role of a “Chief Governance Officer”. That role, however, may then compete in a way with the CEO, the Chief Executive Officer. Or, how do we have to think about that? I am curious to learn about companies that have put the “Corporate Defense Management and the Value Preservation Imperative” in place effectively. I am positive there is more interesting work forthcoming from Sean. And, I am keen on reading it.

Sharing online access to fresh article – up to 50 downloads

20 Oct

50-pdf

Up to 50 downloads free of charge

Sarens, G., Lenz, R. & Decaux, L. (2016) Insights Into Self-Images of Internal Auditors, EDPACS, 54:4, 1-18

EDPACS, 54:4, 1-18

manuscript_insights-into-self-images-of-internal-auditors_2016

Abstract

The purpose of this paper is to critically analyze self-images of internal auditors in the light of the metaphors and short descriptions they give about their own role(s) in their organization. Worldwide data have been collected via a forum for internal auditors on LinkedIn where they were asked “If you were asked to write down a catch-line to sum up your role as internal auditors in your organization, what would it be?” The analysis distinguishes five clusters of self-images whereby some of these self-images could be self-inflicted pitfalls creating the wrong expectations and perceptions within the organization: (1) negative self-images that may create distance and form the basis of non-acceptance; (2) overly modest self-perceptions; (3) use of self-evident and empty words that could lead to marginalization in the eyes of internal auditors’ stakeholders; (4) overly ambitious claims, Superman-like, creating the basis for disappointment as internal auditors all too often over-promise and under-deliver. Eventually (5), we also find original and helpful self-images that point to positive characteristics and differences, which should help in creating a unique and sustainable identity, and also support internal audit’s pursuit of greater effectiveness. The analysis of how internal auditors view themselves may explain why some internal auditors are on a route to marginalization and disappointment, while others embark on a more promising path creating a positive, unique and sustainable identity as suggested by recent studies. Ultimately, we suggest that viewing internal auditors as farmers is a promising metaphor with which to position internal audit and strengthen its value proposition.

Keywords: Internal audit, self-images, metaphors, identity

Insights Into Self-Images of Internal Auditors

4 Jun

farmer-pic

Sarens, G., Lenz, R. & Decaux, L. (2016) Insights Into Self-Images of Internal Auditors, EDPACS, 54:4, 1-18

EDPACS, 54:4, 1-18

We need to be more like farmers.”

(Sharma, 2010, p. 37)

Abstract

The purpose of this paper is to critically analyze self-images of internal auditors in the light of the metaphors and short descriptions they give about their own role(s) in their organization. Worldwide data have been collected via a forum for internal auditors on LinkedIn where they were asked “If you were asked to write down a catch-line to sum up your role as internal auditors in your organization, what would it be?” The analysis distinguishes five clusters of self-images whereby some of these self-images could be self-inflicted pitfalls creating the wrong expectations and perceptions within the organization: (1) negative self-images that may create distance and form the basis of non-acceptance; (2) overly modest self-perceptions; (3) use of self-evident and empty words that could lead to marginalization in the eyes of internal auditors’ stakeholders; (4) overly ambitious claims, Superman-like, creating the basis for disappointment as internal auditors all too often over-promise and under-deliver. Eventually (5), we also find original and helpful self-images that point to positive characteristics and differences, which should help in creating a unique and sustainable identity, and also support internal audit’s pursuit of greater effectiveness. The analysis of how internal auditors view themselves may explain why some internal auditors are on a route to marginalization and disappointment, while others embark on a more promising path creating a positive, unique and sustainable identity as suggested by recent studies. Ultimately, we suggest that viewing internal auditors as farmers is a promising metaphor with which to position internal audit and strengthen its value proposition.

 

 

A ‘must read’ for every audit professional!

6 May

Lenz, R. (2016), Insights into the effectiveness of internal audit: a multi-method and multi-perspective study, LAP LAMBERT Academic Publishing, Saarbrücken, ISBN 978-3-659-85241-1

http://goo.gl/uw2pNz

 

Amazon Kunde – 2 May 2016

A landmark book for audit professionals!

I was very impressed with Rainer’s book on Internal Audit effectiveness. Traditionally, this area is being circumvented by researchers as well as audit practitioners. The results of Rainer’s explorative work and empirical survey not only definitely contribute to clear insights in this ‘black box’, but also cater for sound improvements. A ‘must read’ for every audit professional!

 

Christopher Koch – 24 April 2016

Great inspiration for everyone interested in internal auditing!

This book by Rainer Lenz is an impressive piece of work. What impresses me most is the desire of Rainer to illuminate practical challenges in internal auditing through rigorous research. The main questions that he asks in this book are: What is the role of the internal audit function? How can the internal audit function be more effective? He does a great job in answering both questions by drawing from his practical experiences as an internal auditor but also by building upon his research skills acquired through joint work with Gerrit Sarens. A great source of inspiration for both practitioners and researchers in the field of internal auditing!

 

Boelerheide – 19 April 2016

Fantastic Book to understand the Effectiveness of IAFs

This work is great to understand the position of the IAF in an uncertain environment and to see the value of an effective IAF for the board and other stakeholders. The author created a great and understandable story and supports both sides, practitioners and scholars with new insights and perspectives. I can use the book for concrete questions or as an overview of possible effectiveness measures. Great work!

 

Tracie – 6 April 2016

How “soft factors” contribute to the success of your Internal Audit function

Rainer’s work points out that the effectiveness of Internal Audit is largely determined by “soft factors”. His insights contribute to our understanding of the relationships between the role of the audit function, communication skills, and a successful audit outcome. The value of this cannot be overstated given the highly challenging role that internal auditors undertake in today’s global environment.

 

Tim Leech – 6 March 2016

Challenging the Status Quo

Rainer’s paper provides much needed research on the top of how to assess the effectiveness of an internal audit function. A key problem has been customers of internal audit services have not invested much time considering how to assess whether the function is adding value commensurate with the cost of having an internal audit function. His paper raises real and valid concerns using existing IIA standards as a primary metric to assess effectiveness. It is a long read and rich with research and analysis. For those willing internal audit leaders and customers willing to invest the time it is well worth the investment cost.

 

Amazon Kunde – 4 March 2016

A perfect marriage between sound academic research and totally applicable sharp end practice

This highly structured and logical work addresses some real issues of fundamental importance to organisations in general and the Internal Audit (IA) profession in particular. I doubt there is a single Board Exec. or Non-Exec. or IA professional for whom aspects of “7. Discussions” and “8. Conclusion” will not resonate, either as affirmation or as inspiration to investigate the root causes and address issues they hitherto would not realise they had.