As internal audit leaders, we know and understand the importance of developing and maintaining effective channels of communication with our key stakeholders. Those stakeholders can include front-line employees, process and control owners, middle management, senior management, the C-Suite, external auditors, sourcing partners, regulators and, last but not least, the Audit Committee (or comparable entity) of the Board. Few things can derail the audit committee’s perception, confidence, and trust of internal audit faster and more profoundly than ineffective communications to and from the internal audit function.
Becoming expert communicators is core to the success of Internal Audit within our organizations. Some would say, even more important than the basic technical skills like controls testing and documentation, technical accounting, risk assessment, data analysis, business acumen, and more.
This article raises five key questions we should all be asking on a periodic basis about the effectiveness of our communications with our key stakeholders − especially the audit committee.
When was the last time the Audit Committee chair and CAE performed a communications quality assessment?
Periodic assessment of “communication effectiveness” is a critical yet often overlooked component of Audit Committee and CAE responsibilities. CAEs should consider promoting and facilitating a communication quality assessment on an annual basis. Good communication is the foundation of any successful relationship; failure to successfully communicate hinders relationship building and diminishes credibility. A periodic assessment review might include:
- Nature, timing, and frequency of meetings and communications
- Use of quantitative or qualitative ratings
- Delivery mediums (reports, dashboards, executive summaries, etc.)
- Areas for improvement and action plans
What are some key indicators of effective communication efforts and activities?
Employing a variety tools and techniques is vital to ensuring the on-going effectiveness and success of the CAE’s communication with the audit committee. In addition to the more formal communications quality assessment, the most successful organizations also monitor communication efforts and Audit Committee relationships on a real-time basis for indicators that communication efforts and activities are working as intended. Examples might include:
- Conducting candid, open and sometimes difficult discussions
- Paying attention to body language, tone of voice, and choice of words
- Asking board members for feedback and suggestions
- Focusing on “quality over quantity” of communications
- Obtaining easy access to the Committee
- Engaged discussions on current and future hot topics
What are some red flags of ineffective communication?
Even more important than watching for indicators of successful and effective communication is the on-going and consistent monitoring for signs or red flags that your communication efforts are not as effective as intended. Proactive adjustments or modifications are critical at the first sign of ineffective communication with your Audit Committee. These red flags might include:
- Conflicting goals and objectives
- Mixed messages coming from Management and the Committee
- Too much time spent on previous topics and discussions
- Lack of audience engagement, interest and focus
- Inefficient Committee meetings
What are some techniques to maximize the CAE’s private session with the Audit Committee?
While the CAE regularly participates in Audit Committee meetings with executives and the external auditor, private executive sessions held with only the Audit Committee and CAE can help foster a successful relationship with the CAE and the Internal Audit function. Private sessions are a recognized best practice and will help improve oversight and governance of Audit Committee.
- More frequent (and shorter) sessions are typically more productive
- Promote two-way dialogue and ask questions
- Provide concise and compelling information - avoid data overload
- Leverage these sessions to foster close but independent relationships
How can we promote active listening among all meeting participants?
How effectively and actively people listen is primarily driven by the receiver. However, there are things that presenters and communicators can do to significantly increase the probability that their message is effectively delivered and received. “Active listening” is fully concentrating on what is being said rather than just passively hearing the message or words being presented. Active listening is giving full attention to the presenter. Techniques that can be used to encourage active listening include:
- Understand people remember only 25% - 50% of what they hear
- Know and understand your audience. What presentation format works best?
- Utilize the most effective communication mediums and formats
- Deliver your message with a positive attitude
- Monitor “feedback” from your audience during presentations (eye contact, nodding, postures, smiles, distractions, etc.) and adjust or modify accordingly