This month’s Audit and Risk magazine features one of our clients – Rolls Royce. In this article Phil Gerrard (Director of Internal Audit) discusses the importance of strong interpersonal skills in internal audit. In a role that relies heavily on speaking to people across the organisation in order to gain insight and understanding, interpersonal skills really are key and are often valued above technical expertise which can be taught.........
Audit & Risk - Features - 30 June 2015 - Words by Ruth Prickett, Photographs by Peter Searle (http://auditandrisk.org.uk/features/exclusive-preview-audit-and-risk-julyaugust_4678)
It is as important for internal auditors to understand the philosophy of their internal audit function and the soft skills that it requires as it is to have technical expertise, argues Phil Gerrard, director of internal audit at Rolls-Royce. He explains how this approach is helping his team to develop and add value to its relationship with managers, non-executive directors and shareholders.
Rolls-Royce may be a household name and an international business employing 54,000 people in 50 countries, but many of the challenges facing Phil Gerrard, its director of internal audit, will be familiar to those managing a function in very different markets and types of organisation. For a start, he has a team of only 43 internal auditors, so one of his priorities is to enable them to work as efficiently as possible and ensure they are focused on what matters – and that includes establishing a clear philosophy for the function and encouraging the level of trust needed for managers to approach internal audit, rather than waiting for the auditors to unearth problems.
The internal audit group is split geographically and by sector into small teams in offices in the US, Asia and Germany, with the rest in the UK. Extra resources are available via co-sourcing when particular languages are required, or for specialist areas such as treasury and cyber security.
“I do have an ethical hacker in my team, which is unusual,” Gerrard says, “but we still worked with others when we reviewed our cyber security. Our non-executive directors want to know how we perform relative to other organisations in areas like this, and co-sourcing means we can get an external expert to benchmark us.”
Gerrard also works closely with Rolls-Royce’s director of risk to discuss approaches to emerging risks. “It’s important that we have a common perspective on risk and are all using the same language within the business so we understand each other properly,” he says. “Even simple terms such as ‘control’ can have different meanings in different parts of the business.”
Most of the internal audit team he inherited are, like Gerrard, accountants by profession, but he has been keen to broaden the background skills and expertise of the team by bringing in more people with commercial and operational experience. He is currently establishing a programme to rotate people into internal audit from elsewhere in the business. The group CEO and CFO have supported this by publicly stating that internal audit is a route to leadership roles and that it can accelerate an individual’s career development.
“We’re still at the early stages,” Gerrard says. “We now need some good role models to come forward.” He has been talking to some of the business’s 15,000 engineers to explain the breadth of experience they would gain, as well as opportunities to work worldwide in different sectors. “In addition,” he says, “it’s good to highlight that they would get great exposure to the senior leadership team early on and would be influencing sector presidents, among others.”
This kind of exposure can be challenging, Gerrard admits. But it is also rewarding. “I’d rather have a bright, enthusiastic person with sound soft skills whom I can develop than a career internal auditor who doesn’t have these qualities.”
Want to find out more?
Look out for the full feature – “Agile Auditing” – in the new issue of Audit & Risk.