Page 20 - Internal Auditor M.E. (English) - June 2018

auditing culture

By: James Roth
How to Audit Culture

Culture audits can help practitioners gain insight

into the causes of poor organizational behavior.

Enron, Worldcom, FIFA, General Motors, Volkswagen, and Wells tone at the top, but it is also influenced by factors such as business
Fargo are just a few examples of scandals caused by organizational strategy, organizational structure, incentives, employees’ personal
cultures that encouraged inappropriate behavior. The reputation values, and human resource practices. Each factor interacts with
risk cries out for audit coverage, yet only 42 percent of internal the others in a complex web. Adding to this complexity are:
audit functions are auditing their organization’s culture, according Subcultures Managers create subcultures within their spheres of
to The IIA’s 2016 North American Pulse of Internal Audit study.
influence, which might not be consistent with the organization’s
Auditing an organization’s culture can be challenging because of culture. This challenge is an opportunity for internal audit because
its complexity, its subjectivity, and the potential resistance of key it can be identified during audits and provide valuable information
players. However, approaches and techniques pioneered by some for higher-level management.
internal audit functions can help auditors successfully enhance Different Cultures There is no right culture and no ideal risk/
coverage of culture. reward balance, even for different parts of the organization. For
Complexity of Culture example, finance may have a more conservative culture, and sales
may have a more aggressive culture, which is appropriate within
One definition of culture is “the actual values that influence limits. To meet this challenge, internal auditors must have good
everyday behavior within the organization.” These are not the judgment, business knowledge, and transparent communication to
organization’s stated values or desired values, but the values people put such differences into perspective and determine whether they
actually live by in the workplace. Culture is shaped primarily by are appropriate.

18 INTERNAL AUDITOR - MIDDLE EAST JUNE 2018