Highlights from AccelPro Audit - Volume I
With Anita Chan, Danielle Ritter and Mike Peppers | Interviews by Alizah Salario and Jessica Stillman
Listen on Apple Podcasts, Spotify and YouTube
Welcome to AccelPro Audit, where we provide expert interviews and coaching to accelerate your professional development. And thank you to the hundreds of new members who have joined the last few weeks.
Today, a chance to catch up on what you’ve missed: we are featuring excerpts from recent AccelPro interviews with experts in the audit field. Stay up to date with new podcast episodes along with supplemental materials, back again next week.
For the full audio and transcripts:
KPMG’s Anita Chan on How Companies Should Get Started with ESG Reporting
Instacart’s Danielle Ritter on the Role of Audit at Tech Companies
The University of Texas System’s Mike Peppers on the New Global Audit Standards
Listen on Apple Podcasts, Spotify and YouTube
I. On How Companies Should Get Started with ESG Reporting
With Anita Chan, Audit Partner at KPMG
Jessica Stillman, Host: I really want to dig into that concept of controls and processes, which you've mentioned a couple of times. How do you start building those controls and processes right now when there is so much uncertainty? And who should be involved in that effort?
Anita Chan: I like to say, start small and start now. If you think about greenhouse gas, it might be a priority topic you typically have control over so that you can get that data in a more efficient, effective way as compared to Scope 3, where you have to seek out from other third parties what that data potentially might be. So as a starting point, we've always suggested to clients, start closer to home. Then, leveraging the financial reporting system and what processes and controls you already have in place, how do you think about reconciliation of completeness and accuracy of data to what audit trail you might have?
One of the interesting things that many clients have come to realize, and we have observed as advisors, is, because of the fragmentation of where the data is coming from in the ESG space, many of those data owners, even within the company currently, don't have experience or exposure to controls or the financial reporting equivalent rigor, to say the least.
They are a bit uncertain as to, what are you looking for from me? Like, this is my Excel spreadsheet. Here is the data. What more do you want? So I think it's certainly not something that could be done in silos. Having that interconnectivity and internal knowledge shared between the operational folks who have the data and internal audit, or the financial reporting group—how do you sync up and have that common understanding of the expectations and then progress towards that vision together?
What we have been observing is some companies, especially larger organizations, are starting to put together a best practice, cross-functional task force. And I think it's helpful to facilitate that dialogue. Voices, experience, and expertise being represented across the organization, ranging from those on the operational side or the supply chain side to legal, or within finance or even from investor relations or human resources or technology and internal audit—they all bring valuable input into how best you collect the data and build a process that could be effective and efficient to yield an outcome that's desired.
Last but not least, I'll just have to make a plug for this because I feel like many people talk about ESG and they focus so much on the E and even the S, but they so often forget about the G, governance. Especially companies building out their controls and procedures, you cannot forget about the governance. Who is ultimately going to provide the oversight of the data? Who's going to own and hold people accountable for having quality, reportable data related to ESG?
II. On the Role of Audit at Tech Companies
With Danielle Ritter, VP Internal Audit at Instacart
Jessica Stillman, Host: One of the interesting aspects of your career is the technologies you work with, but you also just had this other interesting experience: you started an internal audit department from scratch. Can you talk about what were the biggest challenges you faced when you came on board at Instacart? Do you have any lessons learned for anyone else who might find themselves in a similar situation?
Danielle Ritter: I had a couple different challenges. One, I was new in the role. This is my first time as a chief audit executive but also building a new function. For me it was easy for me to go in knowing what I wanted to build. I didn't have this existing perception of what the Instacart internal audit team was because there was no Instacart internal audit team. I had a vision of the type of department that I wanted to have. But actually how to do that was a lot harder. How do I put that into practice?
I was hired to build the internal audit function, but as a pre-IPO company, the biggest mandate with that was get our Sarbanes Oxley program up and running. I knew that's what we needed to do, but I was very adamant that I did not want our audit department to be branded as a Sarbanes Oxley department. I wanted us to be branded as an internal audit function. So I needed to be able to balance between, here's my vision and here's what we should do, but tactically, here's what I'm focused on over the next year plus. It wasn't easy. But at the same time, it's been rewarding.
Focusing on teaching people what the role of internal audit is supposed to do was a challenge. It was also an opportunity at the same time. I didn't have that preexisting predecessor perception that I had to change. I also was in a situation where many of the executives, myself included, first time in the role, and they didn't have experience with internal audit functions in their role before. So I didn't necessarily have a lot of that guidance from them on what their previous experience was, which was a challenge.
If you think about advice I'd give auditors based on my experience over the last two years building this function is make sure you know what your vision is, know what your brand is, know what the culture of the team is that you want to build. So that everything you do can be rooted in that.
And ask about people's experience. What has been your experience in working with internal audit? Knowing your business stakeholders perception or experience of working with internal auditors will really help you frame the next conversation. Some may have experience, some may not. How you communicate and interact with them will be very dependent on what their experience is and how you bring them along for learning what the role of internal audit should do.
III. On the New Global Audit Standards
With Mike Peppers, Chief Audit Executive for The University of Texas System
Alizah Salario, Host: What would you say are the three or four key updates that internal auditors should be aware of?
Mike Peppers: Even though we did a historic reimagining of the standards, we did not change the profession. What we were really trying to do is ask how can we make those more helpful, usable, even user friendly, if you will, for our internal auditors? So we started off by asking our stakeholders, asking our members, what would make the standards more helpful to them. And so whenever we got that feedback, that's how we structured the changes. And one of them was simplification, making them more concise. Over time, there have been elements added to the standards. It had different components of a mission, a definition, code of ethics, principles and implementation guides.
When the users were looking for a topic or needed guidance around something, they could go to one place and see all of the different elements that they might want to consider. From a structural perspective, that was something we kept in mind.
And then we took all of the standards and how they were previously organized, and we put them into five domains. If you want to see topics on ethics and professionalism, you can go right to that domain and look. If you are working with your board or your management, and you're trying to get guidance about that, you can go straight to that domain. Or if you are a staff auditor and you're working on an engagement somewhere, and you're trying to make certain that you're covering the bases you need to, there's a domain for conducting the audit engagement. That structure was important.
And then the other significant change is in the domain that I've just referenced around governance, and around the oversight that our boards have in the relationships that internal auditors have with their boards. Senior management is also a significant part of that, and so for the first time in our standards, we now have more structured guidance around those relationships. And I think that in the near term and longer term, that's going to be helpful to our chief audit executives, and to the internal audit functions as they communicate in meaningful ways with their boards. I'd say those are some of the highlights.
AccelPro’s interviews and products accelerate your professional development. Our mission is to improve your day-to-day job performance and make your career goals achievable.
Send your comments and career questions to questions@joinaccelpro.com. You can also call us at 614-642-2235.
If your colleagues in any sector of the audit field might be interested, please let them know about AccelPro. As our community grows, it grows more useful for its members.