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Balancing the Future Ep. 22 - Adaptation and Growth as an Internal Auditor with Mark Salamasick
231 Plays7 days ago
Mark Salamasick and host Chris Mitchell delve into internal auditing—reviewing Mark’s leadership within the profession, from consulting to financial services to academia and the establishment of a leading graduate program at UT Dallas. Mark shares the importance of finding passion in his work and continuous learning, also emphasizing the need to understand and adapt to emerging technologies. He advises young internal auditors to earn professional certifications and grow their soft skills to help shape their careers.
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Transcript
Introduction: Chris Mitchell & Mark Salamasek
00:00:09
Speaker
My name is Chris Mitchell and welcome to another episode of Balancing the Future. And I'm here today with Mark Salamasek. Mark Salamasek is a guru when it comes to internal audit. I've known him for many, many, many years.
00:00:21
Speaker
And ah believe it or not, I got started way back at Nations Bank before Bank of America. And he was there before I got there. But I knew absolutely nothing. when I met him and he's been very helpful to me throughout my career. So I'm very thankful to him for for that. So, Mark, I know there's something i haven't shared and i'm probably something you want to share with this audience. I know that you've been active within academia.
00:00:45
Speaker
I know that you you've got your own business. I know that you have worn many, many hats in corporate America. So what else do you want to share? Okay, Chris, heyy yeah thank you again for the opportunity to talk to you again. Love always visiting with you and having the chance to do that.
Mark's Journey into Internal Audit
00:01:01
Speaker
ah Probably the best place to start is to go back and why did I why did i do internal audit to begin with? Well, that was not the plan. that never I didn't like planning that, map that out. ah I you know started out in being accounting major, thought I'd go into law and found out I didn't like law Found out I didn't like external audit.
00:01:26
Speaker
And that's where you start. So I started my career actually in consulting, which then leveraged into what did I like about consulting? It was going a lot in different places, the diversity of the work. So I guess to start out with, I'd like to say, whatever you guys do, figure out what you're passionate about.
00:01:43
Speaker
And I was passionate about getting diversity in the work. So um started out four years at Anderson
Career Transitions in Banking
00:01:50
Speaker
Consulting. Again, all the other firms at that time, there were eight public accounting firms, or big eight at that time, and decided the only one that would give me an offer to start out consulting right out versus have to do two years of something you don't like to do being external audit was Anderson Consulting. So ended up there for four years, but a little bit too much travel.
00:02:11
Speaker
yeah People of my group would travel out of Dallas, they'd go to Alaska, they'd go to Australia. We had great partner that would sell work around the world. So that got a little bit old. So found out I love love banking.
00:02:24
Speaker
I always loved it, love financial services. It was fantastic. So I went to to work for the biggest bank in Texas at that time, which was InterFirst Bank, which eventually became First Republic Bank, which then became ah owned by the owned by the FDIC for a year. And then NCMB took it over, then Nations Bank. And i when I guess speak to college classes today, I tell them Nations Bank bought Bank America.
00:02:50
Speaker
And one of the best leaders out there, if some of the viewers have not looked into it, Hugh McCall is the one that had orchestrated the whole whole deal. He liked the name Bank of America better.
00:03:00
Speaker
so a lot of people think, oh, Bank America was doing at one that won it. No, it was really Nations Bank and Kids today, they don't, know, I ask that question of of kids, is they know what Nations Bank, you know, that they were the ones that bought Bank of America.
00:03:15
Speaker
And so it it's kind of interesting on that.
Academic Contributions & Teaching
00:03:18
Speaker
But going back to that early part of the career, I went on and and I did a bachelor's in three years, and MBA in a year.
00:03:25
Speaker
as was a grad assistant. I loved teaching at that time. You talked about, yeah. So consulting, blended that with teaching, taught for full time for a couple years, but never intended to do that as my long-term career. I wanted to do some experience in terms of going to work into the practice. So consulting was what I wanted to do.
00:03:45
Speaker
Ended up staying in banking for the 20 years we started out. And in I like the risk stuff. I like doing the variety of work, like combining stats, like the acquisition. And so I like the dynamics of the change for the 20 years that I spent in banking. So, yeah, you mentioned in terms of then i decided after getting a very nice job,
00:04:07
Speaker
severance package there to go to UT Dallas and start a internal audit program from scratch. Although I had been teaching adjunct for 18 years, I went ahead and said, hey, we already have the IT audit course, been teaching once a year for 18 years.
00:04:23
Speaker
then i had to create all the other courses that go with it internal audit a fraud course data analytics e etc so uh built that to the largest graduate internal audit program around the world uh fortunately had an opportunity to go back into practice after doing that for 12 years and doubled my pension so i would get advise your your people out there if they ever have a chance to get a defined benefit plan for a pension take advantage
Consulting vs. Assurance Focus
00:04:52
Speaker
of it. So my predecessor doing the same thing. And so that's been great there. So yeah, so I had another 12 years of teaching, back to practice, have a nice pension.
00:05:04
Speaker
My wife says, hey, I thought retired. I go, no, I still like doing some work. So currently, I primarily focus on doing quality assurance reviews of internal art groups and then still speaking to some college students.
00:05:16
Speaker
ah class is about the only topic on internal I'm super passionate about, which is on advisory services, on doing the consulting work. So I think the context there, and why I go through all that story is my focus has been being a consultant.
00:05:32
Speaker
That's the kind of work we did at Nations Bank and the predecessor banks and it was more on advisory it wasn't doing the being told what to do assurance kind of work so i really never got that excited about doing the assurance work was always ah more interested in doing the consulting kind of work that's out there so Also had the privilege of working on six editions of internal e textbook. It's number one used worldwide out there. We just finished the sixth edition, which is supposed to come out in July.
00:06:08
Speaker
And they're looking at even more adoption outside of the U.S. s For the U.S., it's probably 90 percent of the schools out there that teach internal audit use use that book out there. So there's six of us.
00:06:21
Speaker
Fun to work with all six of them, but yeah, that i'm I'm done with that that phase of the of my life in terms of that piece.
Career Advice & Mentorship
00:06:29
Speaker
And now also, I do like guest speaking at UT Dallas, UT Austin, and DePaul on one topic, one topic on only, and that's on the consulting, the advisory, all the other stuff now. No no no interest in doing the other other topics that are out there. So that's a little bit about myself. i Loved my career. Very passionate about giving back to the profession, mentoring students, working with others.
00:06:57
Speaker
ah So if any advice I can give others is pick stuff that you're passionate about. it When I was mentoring lots of students out there, I'd say, hey, make sure you're doing something you want to do and make sure you're excited about it.
00:07:10
Speaker
And it's very interesting. One comment I'd get students call me a year, or two years afterwards, or even three to six months, say, hey, I don't like my job. No, the one number one comment, I don't like my boss.
00:07:25
Speaker
And I was like, bosses change. you know I said, what what else don't you like? Well, I like working at this. I like the place, but I don't like my boss. So you know your bosses can change. So making sure that they have the right stated to make a decision because many times the next choice they make is not the right choice. I'd see a lot of times they jump to something just to get out of what they're in So and I know, Chris, in your case, you stay, you stuck it out many your jobs there too, in terms of sticking it out, you know, you got your ups and your downs, but your bosses do change over a time, sometimes good, sometimes, you know, not not so good there. So Anyways, yeah, so now
Evolving Role of Internal Auditors
00:08:06
Speaker
I'm enjoying life. We live close to grandkids, have four grandkids, third of a mile from them, and live up in the Chicago area so we don't have to deal with the heat in Texas anymore. Hey, Mark, that is ah that's an awesome background, and I appreciate your sharing all of that.
00:08:23
Speaker
When I think about the the profession and how things are changing, and we go through that old transformational exercise, I see it going on within public accounting, and you had just mentioned consulting and advisor and what we do.
00:08:34
Speaker
um Because that's what we are. We are consultants within that particular organization to make them better, make sure that we mitigate risk along the way. So what's what's going on with the profession? I see all the change that's happening with the IA, you know, and I see some of the things that are being recommended, but it still seems like they may be a little behind or maybe they're more forward.
00:08:55
Speaker
I'm interested in what your perspective is as relates to where they are. So, and again, i get kind of the feeling in terms I deal with a lot of the IA folks, but also dealing with doing these quality assurance reviews.
00:09:08
Speaker
And I think there's still baggage from the way things were done in the past. You know, sos and it a lot of it depends on the organization. it depends on the industry. Fortunately, you and I worked in financial services, which we are more highly respected.
00:09:26
Speaker
We have a lot more in terms of flexibility, in terms of how we can do things staffing wise, better staff and everything there.
00:09:36
Speaker
I would say there's many industries out there that have not caught up to where financial services is terms of risk management. Many of them that I've gone to and talked to are 20, 30 years behind from where we were back in the nineteen ninety s And I'm like,
00:09:53
Speaker
You guys are not up the way things are doing. So, yeah, I think that if you look at the I and the way they rewrote the current standards is they want you to do more advisory
Challenges in the Internal Audit Profession
00:10:05
Speaker
kind of work. They changed it from consulting advisory because in some countries, consulting is kind of a bad word. So that's why they changed the word advisory.
00:10:14
Speaker
I don't care what they call it. you're do If you're doing the same work, I don't care you call advisory or consulting. They did do away with the consulting advice. standards, was that a bad thing? No, they should have been integrated because it was duplicate of the other standards. So I think the standards overall that were effective January of this year, I think are well written, better organized instead of being crouched up over a 30 year period of time where they just kept adding it make it more confusing over time that out there.
00:10:41
Speaker
So what is, I mean, what am I observing? dev state The profession itself is not changing fast enough overall. The next generation that does come into it has a lot more options other than doing internal audit in terms of other occupations.
00:10:59
Speaker
At the same time, the compensations have not kept up with where they should be to attract the new talent like areas of AI, cybersecurity, technology, those comps are still greater than what internal audit pays and internal audit, you have to be more familiar with lots of different disciplines.
00:11:20
Speaker
And IT audit had many IT auditors work for me, that's what I worked in for my 20 years at the bank. And auditors have lots of other options.
00:11:32
Speaker
And in their case, many of them did move over to information security and they usually don't come back because the cops are better and they don't have to do all this nonsense of writing reports. And they they like to get the hands dirty and actually fix things. So, it yeah, overall, I think the the profession is not moving as fast as some would like. And it's not as fast as it needs to move.
00:11:59
Speaker
And I think AI, if properly used, could have a huge advantage to how internal auditors could work in in the future.
Importance of Certifications in Internal Audit
00:12:10
Speaker
So it's all on how how it's adopted within your particular organization.
00:12:15
Speaker
So when I think about the certification that comes to mind right away when it comes to our profession, and that's being a certified internal auditor, how important is it to get that certification? Because I see folks being more focused on the CPA and maybe some of the other IT certifications, the CISA, so forth and so on. How important is it still to be a certified internal auditor if you want to be in this profession?
00:12:40
Speaker
I think extremely important, probably even more important today than the CPA. And I think the CPA is over time is going to lose more and more credibility. It has lost some in terms of positions are now starting to say, hey, you know, CIA,
00:12:55
Speaker
but Or CPA, and it's not as critical to have the CPA for or some of the roles. I think still that at some of the chief auditor positions, you still see that they want the CPA in addition to CIA.
00:13:09
Speaker
However, working with some individuals that are chief auditors that don't have it. And I'm recommending if they're looking for their next job, they better get it Because in as if they're looking through, you've got ah HR groups that are involved and they're using a first pass. If you don't have it, hey, you're you don't meet through the the the baseline criteria for that. So I think, yeah, you definitely need to get CIA. I also recommend for people to go ahead and do also to do the CISA, even if they are not going to go in and do IT audits. I think it will get their...
00:13:44
Speaker
It's not that hard of an exam. It's an exam where it will get your IT t skills up to a baseline. So I say those are the two for internal audit. Those are the two exams you you need to go ahead, get those certifications, try to get those.
00:13:59
Speaker
you know Many groups still have to get promoted to senior or manager level. You have to have that certification. So you're going to be excluded from certain jobs because you don't have that. So Take it as early as possible.
00:14:13
Speaker
i know at University at Dallas, the way Joseph Moriello now runs the program, if they take it as part of the class, they get 100% on that part of the but class. They should take it while they are in school.
00:14:26
Speaker
Because after they leave, it's much harder. and Like the CPA, CIA, CISA, it's better to take it what you know while you're in school. Also incentives if you do the CISA while you're in school, you know while you're going seeing how through and getting your bachelor's or or master's degree. so So certifications are a first pass that HR takes the easy road of saying, hey, they don't have that. So, hey, we're going to exclude them from the ah batch to go to the next level.
00:14:57
Speaker
You know, when I think about the certifications that were important when I joined, obviously being a certified internal auditor and certified internal controls, IT professional as well. I mean, it's just it's just changed. It's changed in the sense of all these additional skills you need, whether it's being.
00:15:16
Speaker
more on the data analytics side or just yeah know understanding how to use various tools and navigate through programs and and so forth and so on. I mean, what does it take if I'm coming out of school today in order to be successful in the profession other than be a certified internal auditor, certified information systems auditor?
00:15:34
Speaker
What else does it take in order for me to be successful?
Essential Skills for Internal Auditors
00:15:39
Speaker
Number one would be communication skills. That's always been on the list there. So that that's it's kind of like a given.
00:15:47
Speaker
So in addition to that, in terms of being successful in the long run, it's it's taking that additional and initiative initiative. And and that this is an example i always gave students. You want to be able to figure out what needs to be done and and do it versus being told what to do.
00:16:04
Speaker
If you have to be told what to do, you're not going to progress career-wise. They can get a lot of people that will come in there and Go ahead and be told what to do, and they they can execute it.
00:16:15
Speaker
Today, what you need to do to be successful, it's kind of like AI. Yeah. ai you need to figure out how to use AI to your best advantages. You know how to new use the prop engineering to your advantage.
00:16:29
Speaker
You need to figure it out. You don't need to... have somebody tell you how to use AI, you need to be using and and adapting to the culture, to the environment. So, yeah, it's a given that you need to know technology, you need to know business, you need to know all those things. But, you know, ultimately, it's that, you know, communication skills, taking initiative that you would go ahead and Do what, you know, go beyond of just being told what to do. That's the probably the worst thing I've seen with staff over the years that didn't progress to that, you know you know, see people that will not progress behind beyond staff or seniors because they don't figure out, hey, I need to do more than being told by, you know, some boss that, you know, here's what you need to go do.
00:17:19
Speaker
You know, when I think about entering the profession and what was important to me, I didn't know how relevant it would be or how important it would be for me to have, you know, good speaking skills, good communication skills, as you just mentioned, but also making sure that, you know, I was I was comfortable.
00:17:36
Speaker
ah in in selling. And what I mean by selling is discussing recommendations and solutions for ah particular clients. And you know being able to feed into that and be more consultative in nature, I believe it helped me tremendously as I graduated up and through the corporate ladder. I mean, I i started out didn't have a certification but all they knew is that chris was a pretty decent auditor and then i had fun and then i got to the point where i was leading engagements so being able to manage through all of that i think with a certain pace and speed um will definitely lead to success in my opinion and this is you know my coming up from from working at nations bang and then being
00:18:16
Speaker
a partner at a top 10 firm. I mean, it just took all of that in order and and a lot of luck as well. People don't know how lucky you have to be in order to get to the decision, but a little bit of luck or a lot of luck, however you look at it, ah helps with that particular exercise. So when I think about the the change and in internal audit and I start thinking about the IA standards and you said you had mentioned advisory.
Changes in Internal Audit Standards
00:18:36
Speaker
What else is changing as relates to the standards? Could you give us just a brief look at what that new standard looks like compared to the old and what to be on the lookout for um so we can all just be intelligent when we show up and we're and we're sharing on this with our executive leaders?
00:18:50
Speaker
and so the big changes deal with the whole governance and expectations of the audit committee and board. So putting responsibility back to them. Now, some people may not like it. The auditors and chief auditors, the staff, they'll they'll they'll like love these changes.
00:19:07
Speaker
However, the client being your audit committee and your management may not like the changes because it spells out in quite a bit of detail on what their responsibilities are from an oversight standpoint.
00:19:23
Speaker
And I think from that standpoint, the clients have to be trained in terms of your expectations according to the internal audit standards are xyz it was never spelled out to that degree so that's probably the one with most contention there's one area too that i think has been fantastic at least from my standpoint i've started including my quality reviews before internal audit has to have a human resources strategy And in the past, audit groups would go, oh, I'm short of staff now. I need to go out and hire one. And it'd take them six months a year to go find the one person. And that person would go and they be stay a few months. And then they'd leave. and you And there was no strategy. They didn't have a strategy for interns, hiring interns. They didn't have a...
00:20:11
Speaker
a strategy for co-sourcing, which I highly recommend having contracts in place for co-sourcing because they're going to be short at times and that should be part of your HR strategy, which then should be approved by your audit committee and your management.
00:20:24
Speaker
If those things aren't in place, then you're not in compliance with the current standards. So I think that's from a significant standpoint that has the biggest thing. It has all the typical things on use of technology and, you know, in terms of data analytics, all those kinds of, you know, things. But I think the one that is the most powerful is putting responsibilities to outline in the internal audit standards on what other parties have to do.
00:20:53
Speaker
So I think that's that's kind of the bottom line. Much better structure. Again, it's not something that was built over many years. The standards themselves, it took them about five years to come up with this new standard. So it wasn't something that yeah it was done overnight.
00:21:09
Speaker
It went out for thousands of people to review for a whole year after they drafted. And after they Drafted it and head out for that review. They went, they made a bunch of changes to make it even better.
00:21:21
Speaker
There were some things I didn't agree with and they changed those things. And so it it really is so a good document. If people haven't looked at it, there's, there's lots of PowerPoints out on their site that summarize all of the changes in a lot of detail. But I think,
00:21:37
Speaker
Bottom line there is it's much better organized. And I think it's ah easier to understand it after you've looked at some of the diagrams and how they structured it. know, when I think about the IA standards, because there's always a standard, okay?
Building an Ideal Audit Team
00:21:52
Speaker
And there's absolutely a need. If you're a part of the profession, you need to go out there and understand what we're trying to conform to. So if you haven't done so, you need to do so. It's very easy. There's white papers out there. There's all kinds of information out there from all of the major firms, so forth and so on. So go out there and take a look at that because it does impact you and how you do business go forward.
00:22:15
Speaker
You know, when I think about the ideal team and okay and coming up and through the ranks back when I was starting out, we had what I considered. um Obviously, you graduate from a staff to a senior, to a manager, to um to a director level person if you're part of a Fortune 100 or something like that. But when I think about those components even further, you've got now a need for yeah Not only just someone who understands just regular internal audit, but just the system side of it as well. And then you get into the cyber and the other security components of it.
00:22:46
Speaker
What does that ideal team look like in in your mind, Mark, as we talk about, okay, trying to launch a team and get them out there? What does that ideal team look like?
00:22:57
Speaker
Well, it depends on your size too. So that is no question versus the large banks today. And i don't think a lot of people realize this. The large banks like Citibank, Bank of America, Wells Fargo, Chase, they have about 2000 internal auditors. Well, that's a little bit different each.
00:23:15
Speaker
So you take that those numbers and compare them to an audit staff of two people or three people. That's quite a bit different in terms of what kind of person you would have and specialists and all that kind of things.
00:23:31
Speaker
But building a team, you don't want to hire all people that are a accounting majors. There's no question about that. No question. And that used to be the case.
00:23:41
Speaker
You know, years ago, it was like, we'll go to the county. It's the inter-audit part of the accounting program. I would build ah an accounting program, actually, or a inter-audit program within MIS.
00:23:53
Speaker
I would probably have better candidates in the long run because of the skill set that that would have and the ability to learn different things and what you need to know. It's not a lot of the accounting stuff.
00:24:05
Speaker
And I think that's going back to many years ago, internal audit was providing assistance to external audit and they were viewed almost as slaves to the you know external auditors. So it's no longer the case and that would not be ah that an ideal team. Ideal team would have diverse people that have industry experience, would have technology experience, would have some accounting experience.
00:24:30
Speaker
So you're you're looking for people that take initiative, One of the questions I'd find, I wouldn't want, you wouldn't want people that are all introvert. You probably wouldn't want all people that are extrovert. So you want a combination of backgrounds. So when I'm talking diversity, I'm talking lots of different components there.
00:24:49
Speaker
And you don't want to hire them all out of one mode, you know, in terms of even where there where they grew up, where they came from. So the diversity is important terms of all the dimensions that you can look at.
00:25:03
Speaker
But I would still say that you probably could not hire too many that either already are technologists or have a highly desirable job.
00:25:14
Speaker
ah initiative to learn technology. So I would take people that didn't have a technology background, make them into IT auditors because they could do the documentation, they understood internal audit.
00:25:26
Speaker
and so if But if they don't have a desire to learn and use technology, I don't think they are right for my team at least because you have to know technology today you know to be successful as an internal auditor. So ideal team would be that, take initiative. i don't want to hire a whole lot that would have would be told what to do. and i'd I'd be looking for people that cake you know take initiative.
00:25:50
Speaker
yeah know So those would be some of the key things I'd be looking for in the interview process. And I can pretty well, like when I'm looking at somebody's background on LinkedIn, kind of tell, is that going to work out, not work out? You know you can kind of get a ah feeling by what what they've done and and whether or not they they fit that kind of mold.
00:26:09
Speaker
You know, when I think about external audit and all that they're going through right now, because it seems like the business is changing in their focus as it relates to risk mitigation. I think PwC just released their current list of solutions they're going to offer from an advisory perspective.
00:26:24
Speaker
and Some I was familiar with. Obviously, there was some stuff for supply chains. that There was stuff for cyber risk and reg as a whole. I mean, there was stuff for how do we graduate and and look at risk in a different way using technology. So that's embedded in there. But I'm thinking about the two groups. And what I mean by the third line and the fourth line is what I consider you know the externals to be.
External Audit vs. Advisory Roles
00:26:47
Speaker
how do they need to be in sync because what if i think they're changing that much from an external perspective we should be changing as much from an internal perspective because we're working together what are your thoughts although i've seen here recently where they're not really necessarily working they're not necessarily insane because the objectives are very different right um there i mean if you really look at external audit in most cases they're reporting on financial statements or they're doing soccer stocks work stock work or whatever it's it's assurance stuff the objectives are so different now where i don't see them being that closely tied together and then on top of that what you and i've talked about
00:27:33
Speaker
on particularly the big four firms are conflicted out on the advisory sides by so much of the other kind of work that they don't necessarily invest in as much on the advisory work as the their bread and butter being the external audit work there. So I think we're at a crossroads there.
00:27:50
Speaker
And you can see that with know changes to the CPA exam, the accounting profession, I think, is at more risk than consulting or advisory necessarily because they had they're put in a box of what they're their objectives are, where on the advisory side, they can change and adapt. Hey, yeah, we got to put more resources on cyber. We need to be doing much more there, or we need to be looking at you know, systems implementation, because some of those still failed at too high of a rate. So we need to be working on that. So I think there's a lot more potential on the advisory side.
00:28:26
Speaker
And i so I think the conflict out of so many and engagements, even some mid-tier firms I'm hearing now they're having issues related to getting business on the advisory side because the external audit are doing that. And well, and you probably experienced it also in your PWC days is like, hey,
00:28:44
Speaker
you've got to support the external auditors in some of your work though right i mean a portion of it 30 or whatever hey you're going to have to support them and be back to the slave but you know having to support their external audit kind of work out there so uh yeah definitely a lot of dynamics going on there now a lot of dynamics on the external audit profession uh i think you may see another cycle of them spinning off advisory guys you know they do bill at higher rates and so i think you may see some some of that uh also happening in addition to the pe investments in the you know public accounting firm so i you know it's kind of a dynamic changing environment where everybody's got to make make some money there so
00:29:34
Speaker
You know, when I think about that whole transformational exercise and I see that, as you just mentioned, there's a split of the advisory under their own firm. And then, you know, you have the audit tax. i think I think the best example, I think E. Wyatt planned to do that maybe a year plus ago, and they decided not to go down that road.
00:29:53
Speaker
But I do see the revenues growing tremendously from an advisory perspective. I see it somewhat contained as we look at tax and you look at audit. Those are more traditional solutions have been offered. So there is a change. There's a metamorphosis. I think businesses are going and wanting to manage their business differently.
00:30:09
Speaker
And the advisory is definitely where the money is. So if anyone out there looking to get into public accounting, I would say you don't have to do traditional audit tax. you know Check out advisory because there's a lot of stuff going on within those ranks.
AI's Impact on Internal Audit
00:30:22
Speaker
You know, when I think about AI, because I know that's a hot topic now, and people say AI is going to change this, it's going to change that. What is it going to do to internal audit? What do you think? Well, you one of two options. You could either use it and and and figure out how to change it, your job. In fact, I just read an article this morning that everything internal monitors is going to be taped in the in the future. Well, I would love to tape everything. And I'd love to use it as a tool in terms of integrating all the things that you, all the recordings. a I'd love to do that.
00:30:53
Speaker
However, your client may not want you taping all their stuff and will they still be open? So there's some current concerns related to that. Oh, I think it can change internal profession dramatically where it's used for everything that you do. I'm using it on quality assurance reviews a number of different ways even. So I've i've done some presentations on that topic.
00:31:13
Speaker
QARs with the new standards and and and ai So I think it can revolutionize internal audit to the greatest extent. And internal audit has a great opportunity to take it to the next level within their organization by being involved in how the company uses ai throughout it.
00:31:36
Speaker
you know You still run the companies that don't have policies, procedures set up. They don't have their own tenants. They haven't figured out the privacy. they haven't So there's still a lot of companies into that category. Some of the bigger ones have already figured out the you know The public accounting firms have kind of figured it out.
00:31:51
Speaker
But I think in the long run, it's going to be revolutionized. you you know Data analytics is going to revolutionize how you get data from people in terms of of when you do your interviews. It's going to revolutionize the whole process where you're going to have to think about how you do your job differently.
00:32:10
Speaker
So, but the thing that still disappoints me, and I've done a number of presentations in this last year where I integrate questions about AI, and there's still 20%, 20% of internal auditors out there that do not use AI, that say they do not personally use AI, which completely disappoints me because And I tell them, you need to use it because it is here. It's like anything else. If you're working for a company, you need to use their applications. If you work for a bank, you better use their but online banking system.
00:32:45
Speaker
You should use their various loan system. You need to use their systems for where you work at. Same thing here. ai is here. It's not going away. And you need to understand you know how Copilot is if you're Microsoft user.
00:33:03
Speaker
You need to understand Gemini if you're Googler. And the thing i think people are wrong about is they don't understand those products are changing weekly, daily, and they're not ah going to give you the same answer, you know, maybe even the next day.
00:33:21
Speaker
because the data behind them is is different there. And the tools are changing so dramatically. So we're we're still, as a lot of the experts say, is we're still at a point where it's still at its infancy.
00:33:36
Speaker
So we don't know what it's going to necessarily be like, you know, five, you know, five years from now. I mean, we we really don't know, but I will say this, you better be on that man wagon or I wouldn't, i if I was in the business, I wouldn't hire you if you say, hey I've never used AI. I'm like, you know, I've had experienced faculty tell me, oh, it's just not nothing like a, nothing different than a Google search. I go, no, you don't understand. You know, you don't understand the power of what is out there
Enhancing Audit Efficiencies with AI
00:34:08
Speaker
at all. So.
00:34:10
Speaker
You know, when I think about AI and I think about those generic buckets from a methodology perspective for internal audit, and we start talking about, okay, let's discover the design of the control framework. Let's get into the testing of it. Let's get in, let's figure out how we want to report out on this based on the risk that we identified.
00:34:28
Speaker
How can AI not assist you with that? I mean, I could look at any industry and I can look at a particular area and say, what are the risks? What are the key risks for this particular business unit? ah And it's going to kick out exactly what those risks are. Now, I need to be familiar enough with it so i can say, well, hey, that applies, that doesn't apply. But I will tell you, it'll probably be 85% Okay, when I think about building out a test methodology associated with that risk identify, it will outline exactly how I need to test it, you know, and what that probability needs to look like if I can do turnkey 100% of that sample given data analytics and so forth and so on.
00:35:04
Speaker
I mean, i don't understand how you cannot use it to be proficient. I think we get confused to think it's a whole... different system. It's not. It's a tool that helps you be more successful when you're going through the process. So if I can identify those risks sooner, fantastic.
00:35:23
Speaker
If I can figure out a different program that's more concise and precise to test it, that's that's outstanding. If I can understand what probability makes sense, You know, when it comes to error rate, that would be very good.
00:35:34
Speaker
And if I want to report out, it'll even consolidate and report out that information in a really nice and proper format. So I don't see how you can't use it. So anyone who's in that 20% that's not using it, I would say their jobs are at risk because I think it's how we got to upskill in order to be more successful. So I know I said a lot. What do you think? you Do you agree with that, Mark? I know I said a lot.
00:35:57
Speaker
ponder I couldn't agree with you more on that. I mean, like you, the example that you use there, you give it all, hey, I'm trying to accomplish this and have it not only come back with the risk assessment, actually go and perform the testing for you, but you still have to think. I mean, you can't not think, like you said, it's going to be 85% of the, you know, of the answer.
00:36:20
Speaker
But to give you a good example, one here recently on the QAR, I asked it to come up with, and I gave the specific client name. I said, do a risk, ah annual risk assessment for this client.
00:36:32
Speaker
And it came up with an annual risk assessment. I gave it number of staff, et cetera. It was great. i was like, well, this is pretty good. I showed it to the chief auditor. He says, I couldn't come up with a better one myself.
00:36:43
Speaker
So, and how long did it take me to do that? You know, it's less than minute, it's about a minute, you know? So, and it would take him, you know, ah a week or whatever to go through and have all the interviews and,
00:36:54
Speaker
So it's a good way to to kind of bounce ideas off of. I i'd probably use either Copilot, Gemini. Sometimes I run both of them and compare answers, run deep, deep research.
00:37:05
Speaker
So like I'm planning a vacation right now and I said, hey, I'm looking at planning. I'm going to do these things that are going to be gone for 10 days. And It came back with such great comprehensive stuff and a few ideas I hadn't even thought about. I said, why don't you take a look at this? Why this day you do that?
00:37:22
Speaker
So use it in your own personal life for everything that you do. It's going to come back and you can tweak it. It's talk to it like you talk to a person. You know, I don't like that answer. You forgot X, Y, Z. So I'm trying to educate it everything.
00:37:35
Speaker
You know, for instance, what the best internal eye program in in the world is, is that university tech set down. If it doesn't give me that answer every time I go back and say, you forgot. Oh, yes. it It answers back and it says, oh, yes, I forgot them. And then go back and look. Oh, yeah. Now it's at the top of the list there. So.
00:37:52
Speaker
um yeah it's it's it's a fun thing it's like having a companion think of it as of having a companion to bounce ideas off you don't have to call up chris mitchell and say hey this so uh the qar i'm working on right now i mentioned to the uh client he says oh do you have a checklist to do what would be the steps for an internal audit? And I said to him, well, yeah, but it's 10 years old. It's an old checklist. I said, why don't you use ai to do that?
00:38:23
Speaker
And you know so teaching him to use AI versus asking a person to do that, thing that all of you should be doing is the same thing. as Somebody asks you a question, say, hey, yeah yeah, here's what I could give you an answer. But a better answer is going to be the AI tool is going to give you more comprehensive, but you can verify. But get people used to using it as a tool, like you said there, Chris. I couldn't didn't agree with you more on that.
00:38:50
Speaker
So... You know, I think about to the point you were making, the efficiencies gain. I mean, I am so much more efficient. I mean, I remember what it took in order to pull together a program for testing. I remember what it took. Because that was the question before I promoted anyone as senior. i say, so what are the risks?
00:39:07
Speaker
And that go through and help me understand what the risks are associated with a certain area. And if they couldn't, I'm like, well, you're not ready to be senior. You should know that. mean you You remember that old. Yeah. Oh, yeah. Yeah.
00:39:18
Speaker
um And I'm like, you know, now I think the person who is the strongest that shows up is the person that has that knowledge and that background and went through all of those intricate steps that I did over the past 25 years and now have a tool.
00:39:33
Speaker
that's available where I can look at and be like, yeah, that's right. That's wrong. That's right. That's 25% there. Yeah. right. Or 80% there. And I just need to build out from there. I am, I'm a superstar. So I know how it's impacting advisory as a whole, because now I probably have clients come to me and say, well it's not going to take that long to get through that initial planning phase, because I know, you know, how to use AI and how are you integrating that?
Integrating AI in Advisory Services
00:39:56
Speaker
yeah So I'm even having talks with those that are seasoned professionals to say, as you are selling whatever you're selling, if you're not talking about how are you using AI to graduate your client through that exercise quicker and how it's going to save them on fees, you're going to be behind the eight ball.
00:40:13
Speaker
And I said, the person that does it better and can speak to the copilot, can speak to the Gemini's, can speak to the chat GPT's and how they use that as an anchor and how they mine that and they move forward and how they use it as a part of that testing module and all this other. And at the very end, when you even have your probability and your exception rates and so forth and so on, what do what would you score this particular? but Hey, I will do that for you.
00:40:37
Speaker
But you, again, have to use your own audit expertise and make it true. So when I think about because I know we're getting to the end, Mark, and I have a couple of more questions for you, but the one um I would like to ask you, what would you tell that that internal audit professional that's thinking about joining ah internal audit or just anybody?
Career Advice for New Internal Auditors
00:40:57
Speaker
who has that IT t background or accounting background, or i think you can probably get a degree in internal audit now, or risk manager, risk mitigation. ah What would you tell them?
00:41:07
Speaker
What would you tell them about where to the head as it relates to corporate America? Is it industry? Is it big four? Is it a smaller firm? Or does it just depend? It depends, but I always tell students, pick something that you're passionate about, particularly for industry. Like it's an industry you've got ah interest with, like in my case, I always wanted to into banking.
00:41:29
Speaker
And I ended up in banking. Actually, most the quality assurance reviews I do today are in financial services, which I actually understand the lingo and all that, but I'm passionate about that industry. I think that does...
00:41:41
Speaker
set you in the right direction. I also would say pick something that you're going to always be learning. So i I think it's always key to learn more and put yourself in a position where you're going to learn stuff that you don't already know.
00:41:57
Speaker
So if it's something that you know, hey, is it going to really increase you to the next level? Probably not. So you you need to put yourself in situations where you're learning new things.
00:42:09
Speaker
And i think today, too, there's so many different cultures out there. Make sure whatever you pick to do or who you put tend to work with, make sure that you fit into that culture.
00:42:23
Speaker
And you can tell in the interview process and you can you can figure all of that out. The best way to do that, too, is ah talk people that Do that. So if you think you might be interested industry, talk to people working in that industry. So talk to people that do what you think you might want to do. doesn't have to be internal audit either. It could be whatever job it is. you know Find out what they do. And they they go, man, I hate my job.
00:42:51
Speaker
I had in the 12 years I taught full time, I had at least 10 people that either had that had already had law degrees. Some practiced law. They hated their jobs.
00:43:03
Speaker
There's many lawyers. They hate their jobs. Some of them got their law degree and they never used it because they said i was halfway through and I wanted to go ahead and get my degree, but I hate it.
00:43:13
Speaker
and I knew I hated it. So if you start going down a path that you know you're not going to like change the direction and the path to something that you're passionate about and more interested in Don't get you know down this path that you go, oh, man, I found out now I don't like this. So the sooner you probably make that adjustment, probably the better off you're up.
00:43:36
Speaker
Fortunate at many of the jobs i I had, I loved. I only had one that I didn't care for that much. and that was at my last two years at the bank they made me move out of audit because they had a rotation model it wasn't and unfortunately i couldn't get a package at the time they said you had a job you still have a job you just have to figure out what your job is and i picked technology and it was brutal over there it was just completely i learned a lot but it was it was brutal so You know, when I think about where this profession is headed and I think about all of the upskilling that's necessary in order for you to be a good, solid professional, I can just recommend
Conclusion: Evolving Internal Audit
00:44:14
Speaker
it.
00:44:14
Speaker
I recommend internal audit. i I see that PwC is doubling down on advisory consulting. I think a lot of firms will double down on advisory. So if you haven't thought about it as ah as a career, you know, please do.
00:44:27
Speaker
Hey, Mark, it's been an absolute pleasure talking to you, sir. I've learned a lot. As always, I thank you for your time. And I really do appreciate you. Yeah.
00:44:38
Speaker
Well, thank you very much, Chris. Good seeing you as always. And take care. Awesome. I have one message for this audience, and that is, you know, just go to corporate America with ah with an open eye. And what I mean by that, don't be fixated. If you have a degree on in accounting, they'll think you need to go and do debits and credits.
00:44:59
Speaker
ah There are other things that you can do. The internal audit profession is changing, and it's rapidly changing. There are some that are behind, but they have to catch up. It is necessary if you want to be a success.
00:45:12
Speaker
And when I think about all of the great tools that are out there, they can only help you be even more successful. So that's what I want to share. And until the next time, I thank you for chiming in to Balancing the Future, and I look forward to the next conversation.