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RAPPORT

Striking an Optimal Balance Between Assurance and Consulting Services

Practical insights from internal audit leaders

F. Scott Fitzgerald’s description of a superb intellect applies to rst-rate internal audit functions that maintain an optimal balance between their assurance and consulting work. On the one hand, CAEs who shared insights on how to maintain this balance are resolute that assurance services and the internal audit function’s unwavering devotion to independence come rst. Yet auditing leaders emphasize that exibility is crucial in adding strategic value to their organizations via client services that extend beyond their traditional assurance work.

“We make sure we tell our people not to be so rigid that they constantly worry about crossing the line of independence,” says one CAE. “If we’re going to err in our consulting work, we’re going to err on the side of being a little less rigid so that we can provide great client service. at means teaching our clients the best ways to achieve the right balance between controls and getting the job done.”

According to the results of the 2015 CBOK Stakeholder Study (www.theiia.org/CBOK), internal audit’s stakeholders want internal audit to provide advisory work where it does not interfere with its assurance work. Areas beyond assurance cited most frequently by respondents to our study – who included a broad range of C-level executives along with board members – include consulting on business process improvements, facilitating and monitoring effective risk management, alerting management to emerging issues and changing scenarios, identifying known and emerging risk areas, and identifying risk management frameworks and practices.

To be clear, all of the CAEs who shared their insights on leading practices for balancing assurance and consulting work describe an ironclad commitment to maintaining their function’s objectivity and prioritizing internal audit’s assurance services over all other activities. They deploy processes and tactics to ensure these table-stakes assurance and independence requirements are adhered to, monitored, resourced appropriately, and communicated to the audit committee. These CAEs also have in place a collection of interesting practices to select, deploy, monitor, and report on consulting services, which may comprise anywhere from 7 percent to 40 percent of an internal audit function’s time and resources. In most cases, CAEs report that their assurance-consulting work breakdowns range from 80/20 to 75/25.

The consulting practices and approaches shared by these audit leaders, which we detail in this report, are compelling, in large part due to the benefits – for both the organization as a whole as well as for the culture and reputation of the internal audit function – that these governance, risk, and control-focused consulting activities generate. “Consulting helps internal auditors demonstrate that including us in the conversation up front adds value,” one CAE asserts. “We’re bringing governance, risk management, and control expertise, and are asking questions that are critical to business success, at a time that could in uence management’s decision, and helping our partners move the business forward.”

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