GUEST BLOG POST
This may be an odd question to ask, but as a leader of internal audit and risk management it was an important issue for me: Where should internal audit sit in any given organization?
While there is so much talk about artificial intelligence, I believe it is far more important to optimize human intelligence!
Where we sit affects:
- Our ability to know what is happening in the business.
- The perception of us as being part of the business and not in an ivory tower.
- Our understanding of the culture of the organization, including the morale of the people.
- Our ability to have confidential discussions among ourselves and with management – without being overheard.
- People’s ability to visit us without others knowing.
- Ready access to management and staff.
- Our access to files and other information.
- In an odd way, our agility. We don’t have to travel to perform the audit or to meet with people – and meeting with people face-to-face is far superior to a virtual meeting. We can stop by to talk to (or, better, listen to) people without having to schedule a call or meeting.
I liked to embed auditors in the business. If they are local, even in the same trading room for example, they are seen and accessible. They get to know the people leading and performing the business. They are known to them as humans, not just practitioners. You tend to trust people you know, but not so much people from “Corporate.”
See also, “To Whom Should Internal Audit Leaders Report?”
At the same time, though, you need to be able to have confidential discussions without being overheard. You need to be able to say or hear things, even use language in private that you would not repeat to management.
It’s also important for the head of the department to have easy access to and by management, as well as to staff. The same goes for managers within the department.
I have run into problems with this in the past, including:
- At one organization, the CFO wanted me to stop hiring employees in the United States or even in Singapore. He felt I could outsource staffing to India at lower cost. But we had no operations in India, so this made no sense other than as a way of cutting cost (which was debatable).
- At another company where I was interviewing for a Chief Audit Executive position, I would have needed to make an appointment to see any of the C-level executives because they were in a separate, locked, part of the building. I did not accept their offer.
- One company barred me from using the executive coffee room. I liked to go there, less for their coffee (which was admittedly made using an expensive machine) and more to bump into C-level executives. In fact, that was the first place I was able to have a friendly conversation with the COO.
We need to pay attention to our human intelligence in many ways (including employee training, our perception and reputation, and far more).
One often overlooked factor is where we sit.
Are you and the other practitioners in your organization sitting in the best places?
I welcome your thought in the comments section below. 
Norman Marks is an internal audit and risk management expert and author of the blog, “Norman Marks on Governance, Risk Management, and Audit.” He is also the author of several books, including World Class Risk Management, Risk Management in Plain English: A Guide for Executives, and Auditing that Matters.