Auditor, Judge? Or Both?

On the evening of September 18, 2020, the widely revered and accomplished Justice Ruth Bader Ginsburg passed away. On September 16, 2020, President Donald Trump announced the nomination of Judge Amy Coney Barrett to fill the vacancy left by Justice Ginsburg’s passing. Thus began the confirmation process of a Supreme Court Justice. This article will not provide commentary on that process, or provide any opinion on the qualifications of Judge Amy Coney Barrett.

Rather, this article stems from the author’s reflection on the life and legacy of Justice Ginsburg, and the basic qualifications of any potential Supreme Court Justice. The more I considered the basic qualities of any good Justice — regardless of their judicial philosophy — the more I began I see similarities with the basic qualities of any good internal auditor. Let’s explore these.

Independence

As defined in the 2017 International Standards for the Professional Practice of Internal Auditing (Standards), independence is “the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner.” According to the Federal Judicial Center (FJC), judicial independence “refers to the ability of judges to decide disputes impartially despite real, potential, or proffers of favor.”

What independence boils down to in each case is the ability to act impartially. This is distinct from the principle of objectivity, which we will discuss later in this article. The ability to act impartially means no outside interference and no pressure from above. It means not having the fear of losing your job or salary for speaking honestly, even in the face of opposition. It means not being censored.

Internal auditors have an obligation to our stakeholders to speak openly and honestly. A responsibility to work to identify significant risks to our organizations and help preserve and enhance organizational value. Could we reasonably accomplish this goal if senior management had the ability to filter all of our communications to the audit committee? Could we reasonably accomplish this goal if we were never provided the opportunity to speak directly to the audit committee? Probably not.

Could the Court reasonably make truly impartial judgements if the Justices served at the pleasure of the President, or have their salaries reduced by Congress? Probably not. As it is with internal auditing, independence is the foundation of any successful judiciary.

Objectivity

Turning again to the Standards, objectivity is defined as “an unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they believe in their work product and that no quality compromises are made.” While objectivity is not explicitly mentioned, the Code of Conduct for US Judges tells us a judge “should not allow family, social, political, financial, or other relationships to influence judicial conduct or judgment.”

While independence refers to the ability (or inability) of external parties to influence our work, objectivity refers to our own mental attitudes or behaviors that could influence our work. Objectivity means making the decision to act impartially. It means entering each engagement or case with an open mind, leaving behind any preconceived notions or ideas.And it certainly means not subordinating our judgement to others, whether due to promise of positive reward or threat or innuendo.

We owe it to all of our stakeholders to approach each engagement with an open mind. This applies even — and perhaps especially — to those engagements where we may have evaluated a particular area or process before. Just because an engagement resulted in no findings last time does not mean there are no findings to be found in the current engagement. Conversely, just because an area had numerous findings in a prior engagement does not preclude the possibility there may be no findings from the current engagement.

Would you feel comfortable going before a Justice who already determined how they would vote in your case; or been known to openly accept a bribe? I know I wouldn’t. For both internal auditors and Justices, our reputation can turn on our actual — or perceived — objectivity.

Communication

Standard 2420 from the Standards tells us:

“Communications must be accurate, objective, clear, concise, constructive, complete, and timely.”

The interpretation of Standard 2420 further elaborates on how the Standards define each of these attributes. Accurate, objective, clear, concise, constructive, complete, timely. Every communication for every engagement must meet these seven basic attributes. Why?

Let’s start with accuracy. Even one inaccurate audit report can greatly diminish the trust given us by management and the audit committee. Rightfully so. If our communications are not truthful — intentionally or not — they cannot be relied upon to draw any useful conclusions for management and the audit committee. In a similar vein, this is why communications must also be objective. Personal bias in our communications also reduces their value to management and the audit committee, and diminishes their trust in our work.

Communications must also be clear and concise. Management and audit committee members may not know every bit of “audit lingo.” Just as we may not understand some more technical lingo in some of the business units we audit. We must ensure our message to management and the audit committee is clear — they want to know “what’s the point.” They also want to know this quickly. They all have busy schedules with multiple priorities, and don’t have the luxury of reading a full 10+ page audit report just to know if the risks are being adequately addressed. Tailor your communications to ensure your intended audience can clearly understand your message, and they get that message early on.

Constructive. What does it mean to be constructive? According to Merriam-Webster it means “promoting improvement or development.” Our communications must promote improvement or development. This is critical to all of our work in internal audit. If our work is not promoting improvement within our organizations, why should the organization continue to maintain the internal audit function? Ensuring our work — and by extension our communications — are constructive must remain front of mind for internal auditors.

If our communications are not complete or timely, they also lose value to the organization. Nobody wants to have an audit report re-issued multiple times. Likewise, there is also little value in an audit report addressing an outdated process or old data. While in the future real-time auditing may be available for most engagements, we are all not quite there. But that doesn’t mean we can be slow to add value and provide recommendations. If a process is broken and you wait two months to communicate this to the business unit, that’s an additional two months of potential risk events that could’ve been avoided with timely communication.

Let’s turn to the Court for these seven attributes. Are these all found in a typical Court opinion? Well…mostly. They may not always be concise or timely, but certainly:

• On the Court as in the internal audit profession, accuracy and objectivity remain critical hallmarks of any communications.
• If you have a background in law or have done some degree of study in the field, opinions are likely to be relatively clear. For an average person without a legal background? It may be easy to get lost in the words a few pages in.
• As for being constructive, we will rely on another definition of the word from Merriam-Webster: declared such by judicial construction or interpretation. With that definition, we can safely say opinions of the Court are inherently constructive.
• Since opinions of the Court are final, as it is the highest court in the land, we can mark opinions as being complete when they are issued.

If you’ve not ever had the opportunity to review an opinion from the Supreme Court, I encourage you to do so here. Just browse some of the opinions from the Court’s 2019 term, the most recent term for which opinions have been issued at the time of this article.

Thirst for Learning

Perhaps the phrase “thirst for learning” is more subjective than simple “proficiency.” But it is this auditor’s opinion that you cannot truly reach proficiency without a continual thirst for learning. Standard 1210 from the Standards tells us: “Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities.” Knowledge, skills, and other competencies. Ask yourself — is the body of knowledge that made a proficient auditor 10 years ago adequate to be a proficient auditor today? Probably not. Times change, and so should our “knowledge, skills, and other competencies.” To be a proficient auditor, one cannot afford to ignore the value (or requirement) of continuing education.

The same holds true at the Court. The Constitution is amended. New statutes are legislated by Congress, or decreed by government agencies. New problems arise in society. But how the Justices receive this ongoing education may be different from our typical CPE webinars or multi-day conferences (or Zoom summits these days). It requires reading. A significant amount of reading. Briefs, amicus briefs, entire bodies of case law, changing laws and regulations. Each is a nugget of knowledge, without which the Court could not reasonably make just, fair, and objective decisions.

Alas, we have reached the end of this article. Perhaps it was not quite as concise as it could have been. Nevertheless, it was an interesting comparison to me and I wanted to share with all of you and hear your thoughts. Internal Auditor or Supreme Court Justice. We both have a responsibility to carry out our duties objectively, independent of undue influence, display effective communication skills, and suffer a thirst for for learning that will never truly be quenched.

In closing — thank you. Thank you, Justice Ginsburg for showing us “Women belong in all places where decisions are being made.” Thank you for advancing that ideal toward reality. And thank you for showing us how to disagree without being disagreeable.

Note: The views expressed in this article are solely those of the author, and do not necessarily represent the view of any organization with which the author is affiliated.