1. www.globaliia.org Say It Right Presentation to IIA Granite State Chapter 9 May 2013 Phil Tarling Chairman of the Global IIA Board

2. www.globaliia.org  Vice President, IA Centre of Excellence, Huawei  Chairman - Global IIA  Immediate Past President of the ECIIA (2010-2011)  Past President of the IIA UK and Ireland (2005-06)  Provided Capacity building in Internal Audit & PIFC since 1998  Worked in the UK, Estonia, Latvia. Lithuania, Poland, Hungary, Czech Republic, Kenya, South Africa, Romania, Macedonia, Croatia, Serbia, Kosovo and Turkey  Now responsible for developing internal audit capacity in a worldwide Chinese owned telecoms company Background to the Speaker

3. www.globaliia.org Agenda Some Real Changes in the past decade New Communication The Internal Auditor –Communication & Understanding Internal Auditing in the 20 Teens Better Communication is the answer

4. www.globaliia.org Some real changes in the last decade

5. www.globaliia.org Some real changes The profession - founded in 1941 With Europe at war -and the rest of the world not far off

6. www.globaliia.org Some real changes… The profession – developing a new look in the two thousand and tens

7. www.globaliia.org From Clipboard To Tablet Some real changes…

8. www.globaliia.org Some real changes…

9. www.globaliia.org Some real changes… The Auditor with a Tablet

10. www.globaliia.org Some real changes… July 2012 – China Takes Second spot from Japan

11. www.globaliia.org Some real changes… The BRICS announced the setting up of the bank, described as a "BRICS-led South- South development bank."

12. www.globaliia.org But one thing everyone has…

13. www.globaliia.org The one common feature… New Communication

14. www.globaliia.org New Communication

15. www.globaliia.org New Communication… This new communication is INFLUENTIAL Egypt protests organised through Social Media

16. www.globaliia.org New Communication… This new communication BREAKS BARRIERS… Syria unrest shown to the world on YouTube

17. www.globaliia.org New Communication… The IIA’s very own AuditChannel.tv

18. www.globaliia.org New Communication… Social Media is being used for internal audit Professional Development and Enhancement In the first 6 months, AuditChannel.tv had 3.2M hits Is anyone still saying that Social Media is not important? Our companies aren’t, nor is government

19. www.globaliia.org New Communication… The UK Prime Minister’s Web Site

20. www.globaliia.org New Communication… Communication will help us shape the future, not only in countries but within our companies Communication goes across cultures, as much in company cultures as externally Communication is now instant so we have to be ready for it

21. www.globaliia.org New Communication… Communication comes in all shapes and sizes BUT they all rely upon being listened to Written The written word is still persuasive Visual Watching can provide insight Verbal A discussion can lead to a decision

22. www.globaliia.org New Communication To be heard You have to have listeners And to know who your audience is You have to listen as well

23. www.globaliia.org Communication

24. www.globaliia.org The Internal Auditor Communication & Understanding

25. www.globaliia.org The Internal Auditor -Communication This is not new to Internal Auditors Communication has always been a soft skill that auditors have developed, through reporting style and listening But previously Internal Audit had a bad reputation.

26. www.globaliia.org The Internal Auditor & Communication… We have moved on Focussed on risk, Determined to suggest solutions, Not hiding behind independence, Avoiding the sidelines Involved in the organisation’s success or failure Internal Audit is now a key part of the business

27. www.globaliia.org The Internal Auditor & Communication… We need to make sure that what we say:  not only has an audience  not only that people are listening But also that we SAY IT RIGHT

28. www.globaliia.org Internal Auditing in the 20 teens Getting to the Top Table

29. www.globaliia.org Getting to the Top Table Football managers often say that for the goalkeeper to miss a save, 10 other players must have missed it before him. This third line role likens internal audit to that of a goalkeeper in a football match. When the ball is lost in midfield (first line) and the defence (second line) fails to pick up the opposition’s attack, it is left to the goalkeeper (third line) to save the day. There is a reasonable expectation that internal audit will identify the weaknesses in both first and second lines and failure to do so may lead to significant loss to the organisation. 1 st line: Business Management 2 nd line: Risk Mgt / Compliance / Others 3 rd line: Risk Based Internal Audit External Audit and the Regulators are the Referee and Linesman

30. www.globaliia.org Internal Audit Getting to the Top Table DIRECTION ASSURANCE COMPLIANCE CONTROL RISKS

31. www.globaliia.org Getting to the Top Table The third line of Defence provides the outlet to the Audit Committee and Board But the seat is not a vacant seat for the CAE to walk into The seat at the Top Table has to be earned

32. www.globaliia.org Scaling Greater Heights Business is Focused on Risks: Top 10 Business Risks in 2011 Cost cutting Non-traditional entrants Radical greening Social acceptance and Corporate Social Responsibility Executing alliances and transactions Regulation and Compliance Access to credit Slow recovery or double-dip recession Managing talent Emerging markets 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Source: Ernst & Young Business Risk Report

33. www.globaliia.org Risk Based Internal Audit RBIA is not about identifying the Process Risk in the organisation Risk Based Internal Auditing (RBIA) is a methodology that links internal auditing to an organisation’s overall risk management framework. RBIA allows internal audit to provide assurance to the board that risk management processes are managing risks effectively, in relation to the risk appetite

34. www.globaliia.org Meeting Stakeholder Expectations: Are we Being Honest With Ourselves? Audit Committee Executive Management Unacceptable0.0%0.4% Poor0.4%1.9% Acceptable16.1%25.9% Good57.6%57.8% Outstanding25.9%14.0% “If surveyed today on how well internal auditing is meeting its needs and expectations, my audit committee/executive management would probably rate their overall satisfaction…” Source: Emerging Trends and Leading Practices Spring 2011, The Institute of Internal Auditors – Audit Executive Network

35. www.globaliia.org Source: Ernst and Young Global Internal Audit Stakeholder Survey, November 2010 & January 2012 The View from the Other Side:

36. www.globaliia.org Source: Internal Audit Research Foundation Survey, March 2012 Internal Audit should provide Insight

37. www.globaliia.org Source: IIA Research Foundation Survey, March 2012 Internal Audit frequently delivers Insight

38. www.globaliia.org My Internal Audit delivers Insight Source: IIA Research Foundation Survey, March 2012

39. www.globaliia.org Provide Insight Insight should come through linking IA through RBIA with Risk Management and Governance in the organisation Meet our Stakeholders’ expectations we need to ensure that we do what it is they want us to do Educate the Stakeholders in what we can do

40. www.globaliia.org Ascending to the Level of A Trusted Advisor Relationships Compliance function Engaged but not strategic Trusted advisor

41. www.globaliia.org Communication is the answer

42. www.globaliia.org Communication is the answer We have to understand the messages Do we know the language?

43. www.globaliia.org Communication is the answer for IA CAEs need to : 1. Listen to what the Board are saying directly and through the Audit Committee 2. Listen to what the senior executives are saying 3. Understand what the messages are

44. www.globaliia.org Communication is the answer Messages are often coded

45. www.globaliia.org Communication is the answer for IA 4. Make sure that what you are saying is to the right people » Be careful of the “Reply All” button 5. Make sure that your communication is clear » Are your reports concise and in plain language » Is it what you want to say?

46. www.globaliia.org Communication is the answer for IA

47. www.globaliia.org Communication is the answer Use Simple Words

48. www.globaliia.org Communication is the answer 6. Get a name as the “Advisor” to the Board and Audit Committee; the “go to” person for business advice 7. Have regular informal interaction with the Audit Committee members and the Chairman 8. Go beyond just reporting audit results; be part of the business discussing business issues with senior Executives

49. www.globaliia.org Communication is the answer 9. Regularly communicate to senior management and the board: –Emerging risks facing the enterprise –Systemic trends on risks and controls gleaned from audit results 10. All the internal audit team need to be effective communicators

50. www.globaliia.org Thank you Phil Tarling Office: +441189208506 Mobile: +447802656986 Email: phil.tarling@huawei.comphil.tarling@huawei.com Twitter: @philtarling