In this week’s episode I speak with Steve Goepfert about lessons he learned from being a CAE. We discuss various topics including the difference between being a Chief Auditor, and being a Chief Audit Executive; what it really takes to be a CAE; how to provide those moments of head snap (you’ll have to listen to learn more); how to prove and communicate the value internal audit provides; and not getting so engrained in the mechanics that we don’t focus on the big picture.
Steve Goepfert was the Vice President – Internal Audit (Chief Auditor) for United Airlines in Chicago, Illinois. He assumed the role after the merger of United and Continental. He had previously been Chief Auditor at Continental Airlines for 21 years.
He was the 2006-2007 Chairman of the Board for the Institute of Internal Auditors, Inc. (IIA). At the Global level, Steve served on the IIA’s Executive Committee for 6 years (2003-09) and on the IIA Board for 7 years. He previously served as Senior Vice Chairman and Vice Chairman – Professional Services and is a past President of the Houston Chapter (1999-2000), and served on its Board for 17 years. In 2012, Steve was inducted into the inaugural class of the IIA’s American Hall of Distinguished Audit Practitioners. He was recognized in 2013 with the Victor Brink award for distinguished service to the IIA.
He is now enjoying retirement in Tennessee. I am very grateful to have one of the legends in the internal audit profession on the show.
Transcript
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Well, Welcome everybody to another episode of jamming with Jason and today I am excited because I get to speak with a guy who is not only a great guy, but he is legendary in the Internal Audit profession.
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Like I said even more important. He’s actually a really, really nice guy that I’ve really enjoyed getting to know over the years and that is Steve gepford So Steve, welcome aboard. Thank you.
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Thank you, Jason, appreciate it. Appreciate the introduction. Sometimes. Sometimes when I get these nice introductions. I kind of feel like I should just thank them and then turn the turn the sound.
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Off.
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I know it’s
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It’s it you know because we both, you know, we’re on it and we’re going to get into this a little bit about, you know, but I committees and you were the chairman for a while and
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I just remember, you know, to, like, even from the first time that I met you just really got the sense that you’re a genuine person. You’re a nice guy.
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And I’ve just i just seen that the whole time through, you know, a lot of times you don’t get that. And so I just really appreciate that with you.
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You know, I know. I think we would have probably 10 years without seeing each other and then actually saw each other in person at the conference here.
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In what was it, July.
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So we got to actually reconnect in person, which was always kind of fun.
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Now you know there may be some people that don’t really kind of know your story. And so, you know, one of the things about this because you you were chief audit executive for quite a while you’re retired now live in the life in Tennessee.
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As we were talking about, but maybe just kind of give give a little background kind of a high level of, you know, how did how did your career start. How did you end up getting to be chief audit executive, maybe some of the other things that you did with the AI as well. Sure.
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Sure, Jason, be happy to. Well, I think, like so many people in in my generation, maybe not so many today, but in my generation.
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When I WHEN I CAME OUT OF SCHOOL IN THE MID 70s. YOU KNOW, I can even remember in my college classes there was really no discussion of internal auditing as a career path.
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If, if, if you were any kind of a student. And if you’re any kind of a good student, then you had to go into. At that time, the big eight public accounting firms. Otherwise, you were a mutant
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Or there was something or do something in your, you know, your in your past that was had been discovered, where you had to go into industry and go into something called internal audit and so I saw, I went into public worked with a worked in the St. Louis area with a
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As I like to call it the good, the good, firm. The good part of P WC Coopers and lybrand
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And
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And and had a great, a great experience work for five years, GOT TO THE WHAT I WOULD today, you would call the junior manager level.
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And and had some interesting clients, including a client that was
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A fraud client. I mean we literally got them there to dismiss their previous auditors. They just strips dismiss their CEO and they just missed their CFO.
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And we’re an investigation by the SEC and in we came and actually spent the first three months just trying to figure out
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How bad, why did this occur and How bad were the internal controls and then went through and really rebuilt their balance sheet.
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And in fact, you couldn’t believe anything. I mean you couldn’t believe any number on the balance sheet. I still remember having an auditor walk up to me and hand me a prepaid insurance account and said, I can’t figure this thing out.
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Because it does as
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Well it did exist, but the but the basis of what was in the account had been a doctor document from supposedly from insurance companies saying you had a prepaid you had an insurance refund of this amount of money.
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And it was completely unreal. But, I mean, it was, it was quite an experience probably started my my introduction to really understanding what would be like to be an internal audit function.
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After spending that time I joined the airline industry with a with a smaller aligned with Texas international airlines and internal audit and
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Most people probably don’t even remember Texas internationalist they were from Texas, Oklahoma, Louisiana. And the only reason was international as we flew we flew had some flights into Mexico.
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And but continental but Texas international ultimately bought Continental Airlines and so went to work with Continental
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Did a few other journeys long line ultimately ended up over in Miami with Eastern Airlines where I in the late 80s, where I got my first head of internal audit role.
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And was then a chief auditor in the airline industry for over 25 years with Eastern continental and then ultimately my last call as the Vice President of internal audit United Airlines.
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Yeah, so you can you kind of saw throughout your career. I mean, that’s one. The, the airline industry is a great example.
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Of kind of that consolidation over time, right, like Texas international bought continental you ended up leaving and going to Eastern. I can’t remember who ended up buying Eastern
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was apparent holding company. We had a parent holding company called Texas Air Corps.
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Okay, they own both content they own continental they own Eastern they own people with express they owned New York air and they bought frontier and ultimately merged them all together.
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Ultimately, a consolidated continental after Eastern went out of business.
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Okay, well then frontier must have gotten spun out later. Did somebody just
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Frontiers had many, many existences. They
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had many lives there have been many frontiers.
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Okay, okay.
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Yeah, well it’s it’s kind of interesting because like you said, I mean, again, you know, here you start off in public accounting
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And I know that’s that is kind of the, you know, because I think part of this exercise is helping people kind of understand
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How people eventually get into a chief audit executive role and like you said, you know, when you when you came out of school. Even when I came out of school in the 90s.
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It was still pretty much that pathway. Right. I mean, I went to Anderson KPMG and then I ended up coming into internal audit.
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But a lot of people were going into public accounting. Then coming in that’s changed a little bit. Now, right. And so I’m sure again towards the end of your career, you saw that that
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We’re getting people from lots of different lots of different backgrounds, lots of different career paths that end up getting them into internal audit, which I think is actually pretty exciting. I mean, it makes it
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Everybody, everybody, as I always tell tell people, their, their journey. It’s a journey.
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Your career is a journey and you’re not sure which direction you you’re going to go through. I mean, I actually left internal audit for a while, headed up the payroll department at Continental Airlines during the first bankruptcy, which I would tell any
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Human
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Two places. You do not want to be during a bankruptcy and that’s payroll and accounts payable.
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Because your life is going to be absolutely miserable. I know more about bankruptcy law than almost anybody other than maybe a bankruptcy attorney.
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Because of that, and I spent time out of internal audit in in revenue accounting functions and then any financial planning group.
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And then it Eastern ultimately my my CFO came to be in one day and called me in his office and he said, didn’t you run in didn’t. Were you in an internal audit years ago and I go, yeah, he says, well,
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That have been turned a lot it’s leaving and I said, you know, I’d like you to take this role, and that’s actually how I got back into into a lot. It was just
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Doing other kinds of activities and then came back into internal audit but but you’re absolutely right today so many of my peers, even at the time I retired in 2013 or people who have no financial backgrounds.
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Many of them.
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Coming in from all different disciplines. And as you said they bring a they bring a different type of perspective to the to the function. And I think can be can be a very good can be a very good fit to the role
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Yeah. Well, and I think your experience too because like you said, right, I mean, you started public accounting, you went into internal audit, then you left
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Internal audit. And I think sometimes people get scared they’re like, you know, they come into internal audit and they think they’re going to spend their whole career there.
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Or if they leave. They’re afraid they can never come back and and I don’t think that’s the case. I mean, it wasn’t the case with you.
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You know, you see that with a lot of people. In fact, when you get up to the CA rank. Most of the time, those people have had some other responsibilities, besides just audit.
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And so, you know, moving out into the business, you know, some some departments do like the rotational
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Kind of thing. I don’t know if you get if you guys did that at continental or united where you’d actually rotate people out into the business. They work there for a while and then kind of come back.
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Yeah we yeah
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Are for the staff level. We certainly and even at my leadership ranks, we would we would encourage people if there was opportunities in the organization to move out.
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The great news about people moving out of the organization is that after they’ve been out there a while. You can also tap them on the shoulder and say, Would you like to come back and internal audit we had that happen, a number of cases, some of my really good people that
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Because, you know, even my journey. You know, there was a period of time where I was absolutely positively sure I did not want to be an audit.
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And public accounting. I’ve been an internal auditing and I wanted to do other things. And I knew I could do other things. And then, but once I got back into internal audit, I realized after a while, man. I, I really do enjoy
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The internal audit. This is, this isn’t what I want to do, and I only found a boss who wanted to continue to make me happy in that role until and as he said until either I died or until I retired first
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But obviously, that happened because you went through three companies, there is a chief audit executive
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But yeah, you know, I think it’s funny, it’s, it’s, I remember cuz you know again. I came from that public background and then came into internal audit. So I kind of knew a little bit about internal audit, but
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It’s not one of these professions that little kids.
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You know, it’s like, what do you want to be when you grow up, Steve. And you’re like, I want to be an internal auditor, you know, it’s like, I want to be a policeman fireman lawyer doctor right
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Nobody, nobody goes, I want to be an internal auditor when they’re little
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And so most of us just kind of end up getting in into the profession, like you said, kind of from some different round about sort of things right, you got tapped on the shoulder and said, Hey, didn’t you do internal audit, would you come back and do it again.
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So a lot of is kind of kind of end up you know here.
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In I’m sure you know a lot of people that are listening might be kind of the same way. They’re an internal audit right now.
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Or maybe they want to get into internal audit, right, because I know there’s a lot of people that reach out to me and say, hey,
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I want to go into internal auditing. But I don’t know how to do that. What should I do. Should I get my my CIA certification first and it’s like
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Well, you know, it’s kind of chicken in the egg sort of thing, right, because you got to have some experience. But if you’re working on your CIA. That’s probably going to help you.
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Get into an internal audit role easier because because the hiring person knows you’re actually serious about it.
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But you know you’ve you’ve had lots of people that reported to you over the years. I mean what, what, what kind of would be your suggestion for people, maybe that are trying to get into the profession.
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You know, what are some things maybe that they need to try to do to try to get in. So maybe we can talk about that. And we’ll talk about kind of internal and kind of that upward mobility, sort of, sort of discussion, too. Sure. Well,
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You know, you made a lot of great points chase and in, you know, and I always tell people in the in the Institute of internal auditors. I think tries to work on the messaging of what a great career internal auditing is and
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For whatever reason, you know, most people when they when they’re in school and they think about accounting degrees.
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They, they think that, you know, and it’s still there. I mean, it’s still very prevalent in the schools today.
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And there are rare exceptions out there, but there’s plenty of schools that still kind of gear their top Accounting Students
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Got business students into a career in public accounting and and and not and i don’t dismiss that you know I am glad I had my start in public accounting
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I learned a lot of great things a lot of great skill sets that helped me later on in terms of being able to to look at a situation and try to, you know, go through and analyze something
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That and having exposure to different industries that was very beneficial to me. And of course, then
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Being the chief auditor of a fortune 200 company Continental Airlines any fortune 100 company like United Airlines.
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It, it looks good for them to have a chief audit executive who had started their career in public accounting and had a CPA is as well as the CIA.
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And so forth. So, so again, I would never discourage people from having those kinds of backgrounds. But, but I would also tell people that
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Today’s internal audit world. I think people are looking for a whole different list of skill sets, then, then when I certainly came out, or even 20 years ago.
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I really do think that
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There’s less emphasis emphasis on the financial you know statement activities that an internal audit department will have
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And think of the things that you would want to see in people now technology. I mean, with all of the technology you know aspects out there I anybody who can come in with strong information systems backgrounds.
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Who understands maybe artificial intelligence who understands robotics who understands how to make data analytics, saying, I think, is going to be a big, it’s going to be a big plus for them.
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I’ll be very honest with you, I always would tell people if I had my choice between somebody who had just absolutely strong people skills and someone who would pass the got the gold medal on the on the CPA exam or the CIA exam and there’s no disrespect Richard will probably call
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You would take somebody with strong people skills over somebody who got the you know the the top award on the CIA and I go, probably so yeah
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Well, he might call me too, because I would say the same thing.
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When I was the chair of the professional certifications board so and but but I would also tell people that having the certifications.
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Is a great way to distinguish yourself in your career, oh yeah and and versus somebody who doesn’t because it shows the discipline to be able to have that
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That experience but personal, you know, personal skills interactions, being able to deal with people actually enjoying working with people.
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You know, like I said technology skills and so forth are really things that are critical and and then just the ability. I always tell people I was born in the state of Missouri, which is the show me say I always tell people that every auditor should be born in Missouri.
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Show me.
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Show me because so many people auditors walk in, talk to their clients or the people that they’re auditing and they accept at face value, exactly what they’re told. And, and I call it, I call it, you have to have a great deal of common sense and internal auditing sit there
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Okay, I hear what you’re telling me I believe what you’re telling me is true but show me.
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What it is that that will demonstrate to me that this is really working the way that it is as I, as I told people in my 25 years as chief auditor. If I wrote audit reports, based on what people told us, I would have written 25 audit reports.
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Yeah, I wrote a heck of a lot more than 2500 reports, because my orders would go in and ask for information documentation that would tell us what it is.
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That verifies that what they’re telling us is really happening. The way that it is. And people would sit there and go, oh my gosh.
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You know why I thought we were doing this reconciliation. I thought we were getting these things bill timely, I thought this person was checking this against this and
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Nope, not doing it yeah and and so forth. So, so I think it’s some of that also that critical thinking, common sense and in, you know, the things I’m talking about Jason are not, you know, CPA type
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Characteristics there although they are but there, but they’re not somebody who just gone through a business school.
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Type of skill sets, I really do think today that internal audit can have a whole host of people working for them from all sorts of disciplines.
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And then it gets back to what kind of always would tell people what kind of team. Do you want to have. Do you want to have a team that all looks like and sounds like steig effort.
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But you want to have a diverse team and I’m and I’m a big believer that you want the most diverse team that you can have because there’s no way. One person can think of all the possibilities as they’re delving into an area and having all of that.
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feedback and input bubbling up to the surface is really where you take an internal audit department and move it from a good audit department into what I call the world class internal audit department that
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I think some of us really wanted to create and we knew when we got there.
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what it looked like and what it, what it felt like and the enthusiasm that you had when you when you have a department that just had all these top performers who are coming up with great ideas in creating as I call it the moment of head snap when you
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Tell the CEO and the CFO that here’s what internal audit found and you see their head snap and it’s like, wow, how did internal audit come up with that.
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And and that’s what you live for. I mean, you live for that moment where your executive management in your board is sitting there going, Wow, that’s incredible. That’s great information we we didn’t know that all the other people in this company. We didn’t know that was happening.
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Well, and I think that’s why it’s important, like you said, the more the more diverse your team is
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The more you’re able to to kind of see this because you get you get rid of some of the group think that’s there.
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You’re able to process things differently see things from a different standpoint, and there’s been lots of research done right that the, excuse me, the more diverse your team is the more effective it is. It may not be more efficient, but it’s going to be more effective in the end.
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Lady, it is and you know. And again, the chief auditors role is to try to help orchestrate that
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You know, you, you, you’ve got these people that you’re up there, running, running, you know, full force going after challenging something going after something
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And your job is is kind of like an orchestra. You know, like a conductor of an orchestra, you’re out there trying to
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You know, pull people in keep them from bumping into walls, you know, bring them back into this thing, help them guide them and down another path you know challenge them and so forth.
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But you again if you want internal audit today happy. We always talk about providing value add to our organizations.
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Well, there’s only one way you can do that. And that’s really digging in understand how your organization operates and having the creative people on your team that are able to walk in there and deliver those kinds of results to your, to your company.
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Yeah, focusing on what they actually want, right, because I think sometimes that’s where we can get so technical as a profession about, you know, I’ve got to do A, B, C, D, or whatever and
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I need to perform these kinds of audits every year and it’s like timeout guys think about who you’re actually working.
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For figure out what’s really important to them. That’s where you should be focusing your effort if you really want to provide value.
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And that was, that was one of the beauties of me leaving internal audit for a while because in my role in financial planning. I literally was in a special projects group.
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And my my soul task was to walk into various departments, figure out what they were doing and was there ways to improve, you know, the efficiencies was which they did things. Where’s their money being left on the table.
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Was there. Where’s their money being spent. That didn’t need to be spent.
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Whizzer ways we could improve cash flow and was successful at it and then when they said my CFO said well didn’t you be an internal on it.
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And then his other comment to me was, well, you can just do that same stuff that you were doing before, just do it over didn’t turn the water. Yeah.
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Yeah, and you’ll have more people to do of course I had more people to do it with right and really took that kind of a thought process to the internal audit world about how do we how do we go in and make impact to the
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To the organizations that we that we’re at I told this I had this presentation I made last week to one of the chapters and it was about value added audit and told my example.
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Of going to a place like Eastern Airlines that was on literally was on death’s door when I went there and one of the first audits that we decided to do
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Was we thought that we weren’t getting all of the cash proceeds off of our aircraft and so we way back in that way back in the 1980s went in and did some data analysis and realize we had people who were
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We had people we actually call we had one flight attendant we call Mr. Zero and one flight attendant, we called Mr. Because no matter what flights, they were on, they never had any sales on the aircraft even, even when they were flying from New York City to Las Vegas on Friday evening.
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Nobody’s gonna be
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Knowing he’s drinking alcohol. So, so we put auditors on the planes and observed them collecting the funds and then not depositing the funds.
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And then able to get those people off of the off of the out of our company and in the next month. They’re sitting. I still remember my CFO went into their senior management board in the boardroom.
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And all the revenue numbers were going down except one liquor revenues had gone up over $200,000 in a single month.
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Oh and and the CEO and the CEO are sitting there going, what happened with liquor. And fortunately, my boss at listening several the auditors have been out there.
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You know, doing these audits and catching these people not turning in monies and clearly a result is people are throwing money into the till like they’d never done before. And suddenly we had made a huge impact. Just by doing one simple process which to us was almost a no brainer.
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Because we we knew if we went out there and kind of proud of the system that people would do the right things and and that’s really what we ultimately want to do was people encourage people to do the right thing and turn in the proceeds and and the company would benefit from it.
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Well, yeah, but just that just that one audit. That’s two and a half million in revenue yeah that’s that’s
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That’s right.
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That’s a big impact.
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And and that’s and that’s really the kinds of things that we tried to do in my functions were the kinds of things that would really add
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True impact to the bottom line of the organization. Of course it paid benefits because if you do those kinds of things and times get tough and in the airline industry, you know,
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There were, you know, there was 911 there were the recession’s and so forth. And when they come to internal audit and ask you to take headcount it’s like well why do you want to do that when our department pays
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More than you know 5678 times its, its budget. Why do you what’s, what’s the value in doing that. Yeah.
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Well, and that probably helped you that into I guess when when they would come to you and what headcount reductions having that justification actually helped probably so you didn’t have to reduce your staff, maybe as much as some of the other areas did right
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Yeah, well, we had a good argument.
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And yeah. And then, of course, and I also learned the to make sure that we put together. We call it an audit accomplishments list. And we literally quantified the dollar savings, the dollar opportunities that department that identified
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Don’t share that with executive management and with the audit committee so that they knew
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Your the things that we can demonstrate that we bring in terms of value, so that you don’t have to think about an audit that you did you actually have it there and black and white front of you so that you can see that
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they internalize done this for you. By the way, and and so we do add value to the profits.
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Well, that’s one of those big things. If there’s she founded executives listening that are not doing that.
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They need to start doing that because I used to do that too. Right. Because again, they would come back and and try to justify and it’s like, well, I just saved you 10% on our external audit that’s
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X amount of dollars, right. And so actually having some of that stuff in black and white can actually help and really show that you are actually adding the value so
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It does. And, you know, but auditors, as you know, internal auditors or humble people. We really don’t, we don’t like to
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You know, to blow our own trumpets. But in fact, if you, you know, I used to send my bosses.
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You know staff meeting was finance, you know, he was the CFO and sit in him, and you’d listen to the treasure talking about these great deals that they had cut you’d listen to the
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Head of accounting talk about all the savings that he was generating in this area.
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You know, you just go down the list of people who are talking about the great things they were doing and you know internal audit kind of sits there and says, well, we completed you know 90
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Of our audit plan this year. And so we think we’ve been, you know, under budget. And so we think we’ve been successful and
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You have to think about. Also, what other people are talking about and and getting into the mindset of your leaders, where you are adding value plus when you quantify it is, you know, Jason. When you can quantify it.
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Your people get think about June, we’re, we’re not, you know, we haven’t got this process down, we’re not building these transactions out in a timely fashion. And that’s great to say, but if you can put $1 value with it.
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You know, we do have a week.
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It’s even better in it and then will generate the interest of upper management to fix the situations that you’re finding an internal audit. So let’s, uh, you know, that’s always a positive
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Well, it’s funny, because when you said that, it reminded me very early in my career, I was still in public accounting and one of the senior partners that I was working with he. There was one time that there was
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Won’t get into a whole story. But anyway, the, the lesson I learned was, he said, Jason, if you’re not willing to toot your own horn. Nobody else is going to
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And so I think you know you bring up a valid point that I think sometimes auditors. We don’t want to toot our own horn.
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And the problem is if everybody around you is blowing their horn and you’re not right. What’s everybody going to think
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And even though we may be providing value. If you’re not quantifying it if you’re not sharing it with other people.
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They don’t know and i and i think that may be actually one of the causes, why internal audit tends to get hit so hard. A lot of times, because the other executives don’t realize the value we’re providing because we’re not sharing it with everybody else that’s
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That’s that absolutely right, Jason.
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Again, I think.
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All auditors but chief auditors especially have to take that step back, you know, we get so you’d made a perfect comment earlier about we get so
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ingrained into the mechanics of what we do in running an internal audit department, you know, the plan the schedule. You know how we’re doing on the budget and all these things and they and they’re important. Don’t, don’t, don’t get me wrong.
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You can’t
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You can’t ignore those mechanics.
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But if
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For years I was like the chief auditor. I was not a chief audit executive and then one
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day I woke up and said we’re chief audit executive and and I really saw that was the case when 911 came along and called the corporate governance scandals her card and now audit committees are we went
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Listen to audit committees went from being like a perfunctory one hour kind of a meeting to being two hours, two and a half hours, three hours or more
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Yeah.
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Because there were so many critical items that the audit committee had and in it. It upgraded its view of the world. The board upgraded it’s few of the of the audit committee.
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And here we are, as chief auditors.
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And now all of a sudden, we’ve got, you know, I had not at United I had, I had six audit committee members sitting across from me some pretty heavy hitting people
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And they’re expecting me. I got the CFO and the room. They have the chief accounting officer in the room. They have the senior vice president Treasurer in the room. And here’s the chief auditor in the room.
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And
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So you have to be something that you want all those eyes and all those people to listen to what you have to say you want their heads to snap. When you say something to them.
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And and you have that. But you have to have something of value to tell them
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So that they want to they want to continue to listen to you and what you bring to the table. And so I really do think that we have to take that step back and think about what would an executive one want to deliver to both their senior management and to the board.
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That will tell them that, hey, I, I, I deserve that seat at the table just like everybody else does.
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Well, I think that’s interesting because I hadn’t thought of it that way with the CA versus, CAE.
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But you know i i talked to a lot of people and they’ll, they’ll express frustration, right, like I’m not being invited to the big person table right kind of deal.
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And or, you know, I had one guy that I remember. He said, You know, I want to internalize it to be a varsity sport in my organization. So I said, Well, are you acting like a varsity player. And he goes,
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I’m like, well, okay, you’re probably not so if if you’re not, then of course everybody else isn’t going to see you. That way, and like you said, I mean, your experience.
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sitting across the table from the audit committee members all the other people in the room or executives. It’s like Steve It’s time you got to step up, man. You got to actually have that executive presence and act like an executive. If you want to get treated like an executive
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Is a perfect example. Yeah, is as always I always I always try to tell people you can sit there and an audit committee meeting.
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You’ve got in my case, I had six people sitting across from me who my audit committee members and you’ve got this wonderful finding
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And so you read the finding to them. Here was a, you know, we found this about a money. It was, you know, it would it told us a million dollars if you if you give a presentation to people, even
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Like that to your audit committee, they’re going to lose, they’re going to lose interest, even if it’s something important. Even if something should pay attention.
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And I always tell people watch what your top executives do when they’re in a room of their peers and when they’re in the room talking to the board. They look them straight in the eye.
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They have something of value to tell them
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They are forceful in the way they go about doing it in part of being successful in that role as a chief auditor is again being that person, as you said, Who has that executive presence.
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That that will cause people to want to sit there and pay attention to what you have. And of course, then you have to have done your work.
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Yeah, you better have some substance buying it has some substance.
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And and but but also being able to understand what that substance hits. Yeah. Because, because if you go and share
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Things with people that really aren’t important. They sit there and scratch their head and go, I wonder why they don’t realize that this is really not all that exciting versus versus something that just
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Like I said, when when when you’re when I also told the story about, you know, going, going down the elevator with my co one night when you know after work.
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And as we’re walking out of the elevator starts, you know, asking me about a few things. And I start telling you about a couple audits. We’re doing so we’re walking out of the building.
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And then he starts heading for his, his place that he’s walking to and and and I’m walking certain center on the same direction. We keep walking.
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And get to the corner where I need to turn off to go to my place. I know he’s got to go up another block or two before he goes over
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I could tell he was still interested in what I was talking about. So I just continued to walk with him.
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I thought it was actually going to have to end up going into the lobby of the place where you live, because he was so enthralled with it.
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But that’s what you want to do. Didn’t want to you want to, you know, people talk about the elevator talk, you have to have things
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That in the first few minutes catches people’s attention to the point that they keep asking for more information. They want to know about this. They want to know about that. If you’ve done that, then, then you probably going to be fairly successful at what you’re doing, if, if not
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And it’s going to then then it’s going to be okay I guess audit committee meetings coming up. Yeah, I guess I need to find out what all it’s been doing
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Okay, that looks okay and but you’re not really going to be somebody that they want to have come into the room and be part of their be at their table to help
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Well, and I think that’s a great example of you know what you just shared of knowing whether or not you’re adding value to because if if the CEO wants to keep talking to you and like you said, you know, he could have stopped and said, hey, Steve come up for a drink. I want to keep talking.
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You know, he might have said that. And so by having him want to talk to you about that. It shows that you’re actually
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Adding the value you’re being relevant you’re being an executive, you’re really at a trusted advisor level at that point.
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You know what, what you said before, you know, is if we kind of go in, we, we put some stuff out there and everybody kind of scratches their head. Like, why do they think this is important.
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The
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Hard part with that is when they’re scratching their head saying
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You know, this isn’t really important. Why are they telling me this. The next thought that probably pops in their mind is why do we even have this person working for us.
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And that’s, that’s where, again, I think that you know when when people have trouble. I mean, there’s a lot of audit shops that have trouble getting budget.
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You know, and, and, again, if you’re having trouble getting budget. Is it because maybe they don’t view that what you’re spending on already is valuable.
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You’re just a necessary evil that we have to have. And so we’re going to spend as little money as we can, or
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You know, like you said in your departments. You guys were you, you were contributing back in value 510 times more. What’s your budget was so that those are completely different conversations
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When, when you have those budget budget kind of conversations so well, hey, and time, and time goes by quick when we start talking, which I live,
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But I guess but but before, before we cut off to I wanted to just touch a little bit on
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What it’s like to be a CA. I mean, we gave a little glimpse of that in kind of your discussion of sitting across the table from your audit committee.
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But I know there’s there’s a lot of people in audit that you kind of have in your mind, you know, I’m going to
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Come into internal audit. I’m going to be a senior after two or three years and I’m going to be a senior for a few years and I’m going to be a manager that I’m going to be a duck, duck, duck.
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And then I’m going to be a chief audit executive and the reality is, I mean it’s it’s essentially still a pyramid. There’s only one chief audit executive for each organization.
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So what does it actually take to kind of get to that to that level. And what does the job, actually.
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Entail because I think what happens often is, people get promoted because they think that’s just the next step.
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And they get to that step, and they look around and they’re like, geez. I’m not really happy.
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I would have been better to stay at the role lower because I really don’t like what I’m doing now. So I want to kind of give people a little flavor of that too, so that
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And it’s okay to stop. Everybody doesn’t have to be a chief audit executive, it’s fine to stop at the manager director level.
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If, if, if that’s what it is. So maybe kind of help people, you know, know what does it take to get to be a chief audit executive and kind of what is the job actually entail. Sure.
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Well right questions. And that, you know, the first thing I would tell everybody.
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Is your career is a journey. And when you take that journey.
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You’re looking for the things that make you excited to get up in the morning.
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And go to your place of work.
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And
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And ultimately, I realized after a number of years. The thing that got me the most excited to get up in the morning was hi love
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Internal Audit how love what we did an internal audit and I loved the people I worked with an internal audit and I love the people in my department in the company and internal audit, but not everybody will feel that way.
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And that’s part of what your life journey is and that’s why I would tell people who came into internal audit and worked for me after a while they were starting to lack enthusiasm. Well, let’s figure out what it is.
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That we can help you get to that is going to make you excited about coming to work because that’s where you need to be
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Absolutely in it and not everybody needs to be an internal audit, they need to find that thing that’s going to make them happy.
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And then hey, but if they were an internal audit and they enjoyed internal audit and they go out into another department and they find. Wow, that’s what I really love to do.
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They’re still going to have awfully positive feelings about that internal audit girl because they didn’t force me down my throat.
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They were great people to work with. And these people will have learned things about the value of internal controls the value of, you know, having good accountability and so forth and so they’ll be great representatives for internal audit when they move out into the organization.
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You know i would i would tell people, though, that you know when you’re when you’re looking at the career. The first thing you want to do is find that thing that really that you really enjoy
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I would listen to my people talk about you know when they get to Friday. Oh, thank god it’s Friday, you know, and you know, with the weekend. Oh no, I appreciate that I understood that to. Hey, I like the weekends also
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But, you know, then I come in the office on Monday, I go, wow, it’s great, it’s Monday and they look at me, look fine.
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Until the weekend.
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Till the weekend. And so I’m excited. And they go, you know, and when when somebody’s been doing it for as long as I was doing it.
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That was the one thing. No one could ever doubt was you really do like this stuff called internal audit. Don’t you love it. Absolutely love it. And although I do love retirement now.
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I have to be full disclosure, so
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Yeah.
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But yeah, I think you for do to be an internal audit, though in to be a chief auditor, you gotta love the job, you have to be passionate about what you’re doing.
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You need to, you know, I think chief auditor. One of the things it’s critical for a chief auditor to have. And I think all internal auditors but chief auditor is, I call it unwavering ethical compass compass.
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And and that and that means your compass can’t be running all over the board when it comes to ethics, you have absolutely have to know
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Where, where the ethical where the white is and where the black is and you have to be able to discern that and discern it very clearly in your organization, I think, you know, I think with that, you have to have courage. Yeah, well,
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That’s where I was going to kind of go with that as because
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You know what a lot of a lot of times what it means is you have to have the courage to do what you know is right. Right.
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And they stand up when you have to stand up.
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And sometimes it means we die on the hill right i mean
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To kind of use that
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Example, because some sometimes people have to choose to do that, depending on what it, what it is.
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But yeah cuz it does take a lot of courage.
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You gotta have you gotta have courage as a CEO.
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You, you, you’re gonna walk in.
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Internal Auditors and chief auditors. I always say, have to report the facts we we don’t have an option.
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Everybody else in the organization has an option internal audit doesn’t have an option we have to report the facts that doesn’t mean that your leadership in your company is going to like those facts.
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Fact, they might dislike it tremendously.
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Internal audit is coming in and reporting those specific facts.
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Because maybe they’ve gone out and told who knows the board other stakeholders. Here’s the facts and internal audits coming in and saying, No, these are the facts.
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Maybe you’re going to tell them facts about people that they have very high opinions about
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And guess what, here’s the facts and and that takes courage it takes courage, because a lot of people in organizations will sit there and do what I call the bobby hits
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They will nod their heads to the most highest person what they’re saying and go. Yep, that’s the way it is.
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Internal Audit doesn’t have that option internal audit pull Bob their head up and down when there’s a reason to and when there’s not, you have to turn it from side to side and told people not, it’s not that way. This way.
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And and that takes takes a lot of courage, because the people you may be reporting on maybe very senior in your company.
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And you still have to go in there and and report the facts. So I think you have to have a lot of courage in that role. And if you’re not
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Then you need to get out of that role very quickly because the company needs somebody who is going to be that person who is going to report the facts, no matter what they are.
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And and report them all the way up the food chain up to including to the audit committee of the board of directors.
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Because when they don’t. That’s when organizations can have the run the risk of being in a very, very difficult situation.
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And and you don’t want, you don’t want to be part of an organization that that’s like that right and but but if internal audit doesn’t do it. I always would tell my staff if internal on it’s not going to look at this matter, who else will.
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Yeah, and that’s why a lot of times we end up getting some of those politically sensitive
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Kind of things to deal with. But that’s, that’s, again, that’s the role and there’s the reason you know usually why most people have a dual reporting relationship to help make sure that we actually can
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You absolutely are in the right position as the chief auditor, because in so many. And then our company when we had investigations of department heads.
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Other executives and so forth, internal audit in our companies did that because of our primarily because of our reporting relationship.
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Because, because if things got off the rails and manage upper management wasn’t going to do something about still had that out direct avenue to the audit committee to be able to report. You know what was happening.
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Plus, we were very, you know, objective, you know, as I said, internal audit doesn’t have vested interests. We’re just trying to ferret out the facts.
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And so, you know, we’re not coming in after somebody for vengeance, or anything else. And, you know, but you have a role to do and you so you’re going to do it.
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Yep. Well, it’s a tough job, but somebody’s got to do it right.
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That’s right.
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You did it for 25 years and loved every minute of it.
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Right now is a lot of fun.
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No. Well, hey, Steve, I, I really appreciate you talking with me because I think, you know, again, there’s a lot of really good information.
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That kind of came out of this, you know, for people. Again, whether they’re
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Kind of moving, moving up the chain and and trying to figure out, you know, do I want to be a chief audit executive and it’s okay to not want that because
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There is a lot of. There’s a lot of curves. There’s a lot of politicking there’s a lot of other things that go along with the job. We were talking before we started recording
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That a lot of times people see the good things they don’t see what goes on behind the closed doors, right, or what I used to
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Say, sometimes is like you know things kind of come down and they end up resting on your shoulder, and you can’t let everybody below you know about it.
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Or can’t are trying to protect them from it. And so a lot of times the pressure that the CIA feels others around them in the department have no idea.
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Well, and if you’re if you’re a good chief auditor.
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You, you want your people to work without feeling like they’re constrained. You don’t want them to be, as I like to say SOARING WITH THE EAGLES
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You don’t want them to be tied down. You want them to be out there, enthusiastic, you want them to be motivated
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And so forth. You know, there are a number of things as we all know in in organizations where there are plenty of politics and the chief auditors no exception of having to, you know, deal with other department heads.
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Deal with their superiors in the organization deal with the board and so forth, many pressures put back down on them and what you want to try to do is filter through that.
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Tell people what they need to do to do their jobs, but try not to let it bear them down and you know and I say, but that’s part of leadership.
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You know,
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Leaders, you know, I, it’s hard to motivate people if all you’re doing is giving them doom and gloom.
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And, you know,
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I served in, you know, airlines, I went through my career three bankruptcies. Yeah, and you know in went through four mergers.
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And you know, when you go through those kinds of situations of surgery, certainly in bankruptcies. It’s hard to keep people motivated
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To want to come to work and do the right kinds of things, but you have to as a leader.
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You know, you can either, you know, you either put up the white flag and surrender or you can get in there every single day and do the good fight.
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And. And I think part of it again. One of the reasons that I was successful in my career was
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Work through all those things. Yeah. Continue to, you know, continue to produce results even in the darkest of times and even on the most trying circumstances and kept my people, you know, highly motivated
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Because of the things we were able to accomplish to help our company continue to exist. Continue to succeed and and part of that is again the edit.
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The. I call it the positive attitude you you know so many people come into the workplace, who just, you know, they’re
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They the glass is half empty on, you know, I understand that, too. I, you know, I’m an accountant an auditor glass is half empty at times but but it’s also have full
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Yeah, and and taking that positive attitude and making things happen you know taking taking things when they’re tough and succeeding, I think, is really is something that also separates people in their careers.
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Easy to succeed when things are really, really good.
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It’s hard to succeed when things aren’t as good man and people who can help you succeed when times are not good or ones, you definitely want to have around as things start picking up. Yeah.
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Well, no. And I think it’s, you know, to kind of use. One of the phrases you just use there. I think, you know, Steve, you’re one of those people that has fought a good fight.
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Your whole career, you know, you’ve gone through, like you said, I mean, what was it three
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Three bankruptcies for mergers or something like that right and and you’ve had a lot of people that have worked for you over the years, and you’ve really helped develop
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And grow the practice of internal auditing. So really, again, kind of honored to have you on here with me and to be able to talk and
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And hear your wisdom again. And hopefully, you know, again, that people that are listening that will continue on and you’ll continue to keep impacting the profession and people’s personal lives.
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As we go forward. So thank you. Thank you, Jason. And again, I commend you as well because you are fighting the good fight, you go
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Out of this
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Great training and and again trying to help people do the do the right things and understand the value of what we do is internal auditing and you should be commended as well for for helping move things in a positive direction.
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Thank you, Steve. I’m glad you think I’m doing
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I know sometimes I think people just think I’m crazy, but anyway, it doesn’t matter.
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But it helps to be a little warped
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To be an internal auditing.
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To especially sense of humor.
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So if the warp side can come out.
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Yeah, I just try to hold that back because sometimes it freaks people out.
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So all right, well hey thanks. Thanks again, Steve. And yeah, so for everybody listening. It’s kind of a wrap for today. But we’ll catch you on a future episode of jam with Jason, so yeah.
