The Accountant-May-June 2017

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Business practice and development ORGANIZATIONAL POLITICS INTERNAL AUDIT AND ‘THE MUD’ Character is a contributing factor to creating it By CPA Mercy Bukania, marceybukania@gmail.com ‘Organizational politics.’ These are the words on every employee’s lips today. Organizational politics has always been a fact of life in modern worksites. The struggle over scarce resources, the conflicts that arise when critical decisions need to be made, and the existence of heterogeneous interests among individuals or groups serve as an ideal habitat for the emergence of power-seeking or influential behaviors that are targeted at various members of the intra- and extra-organizational sphere. This ‘political behavior’ represents hidden dynamics, undercover activities, or other goal-seeking events that frequently conflict with the overall organizational goals. For most employees who report and commence their duties in such organizations are always in fear, of scary communications from their bosses. ‘What sort of email has my supervisor written to me today?’ “I am extremely offended!” What does he mean I insubordinated him? These are situations all too familiar among a vast majority of employees in various institutions today and If not managed in time, become a chronic disease that refuses to heal with any ‘medication’ it receives. In this article, I choose to refer to organization politics as ‘the mud’. The mud can be extremely inhibiting to the growth of an internal audit department because of its implications. The Origin of ‘the mud’ What creates ‘the mud’? Well, from experience, I have come to realize that ‘the mud’ is created as a result of many factors ranging from the scramble for limited resources, the type of managerial decisions which encourage hypocrisy, secrecy, rumors among many other vices, lack of SMART objectives to shape all activities among many other factors. But where does the problem really begin? Based on my experience, it is the small issues that we never imagine can be of great magnitude. I like to view an organization as this small community where we all come from diverse religions, races, political affiliations and ethical backgrounds but who have a common goal. But have you ever thought that ‘the mud’ could stem from something as simple as our genetic makeup? By this I mean in simple terms ‘how a person is’, ‘their character.’ Kaldina, a senior associate working in the litigations department of a law firm was a passionate employee about her job. She worked diligently and met deadlines. Her effort was instrumental in increasing the firm’s client base by 75%, the highest the firm had ever achieved since its inception .Her job required her to be at various locations within the country whenever she was required to do so and her boss was always well informed about her work plan and her whereabouts. ‘I want us to work as a team with trust and honesty. i have no problem with how you choose to work as long as you perform your duties as required.’’ ‘Kaldina welcome to the team’, said Maurice during kaldinas induction to the firm as a new employee ten years ago. ‘Kaldina, Maurice the managing partner instructed me to hand you this envelope when you arrive’ said Alicia, the personal assistant to Maurice. Kaldina opened 12 MAY - JUNE 2017
Business practice and development the envelope, inside it was a document that read, ‘RE: MISCONDUCT BY KALDINA SHARMA…’.The complaints from her boss were clear as she read through, despite the fact that she always made him aware of her activities and her whereabouts. To her shock and amazement he vehemently denied this in the letter that he on several occasions had requested her to perform various activities in the litigations department but she went ahead and defied his instructions. Further, he claimed to have had no knowledge of her whereabouts or her activities and that she acted on her own on every matter she handled for the firm. How does this happen? How is it that as an employee you do your best to inform your boss of every activity you undertake and to which at the time he or she has no objection and gives a go ahead and then later denies these actions? According to me, it boils down to one thing, Character. Character is a contributing factor to creating ‘the mud.’ When you think about it, if all employees were of good character that is; if they were trustworthy, cautious, and gentle amongst other traits, would ‘the mud’ really exist in the magnitude it does today? Yes, it would exist, but with a lesser magnitude than today. Internal audit and ‘the mud’ One of the key roles internal audit performs in an organization is to give assurance on the effectiveness of internal controls and ‘The mud’ can be a big obstacle to the performance of this key role. ‘How?’ I would say this in the words of Richard F Chambers, President and CEO of IIA Global, “The good news is that our stakeholders view internal auditing as one of the most honest and ethical professions. The bad news is that, that may not always be what they seem to want” Carol, the internal auditor of the same firm was requested by Maurice to conduct an audit into the Human resource practices of the firm. According to him, there were suddenly doubts on how Kaldina was recruited because the recruiting manager was of the same race. Carol nevertheless conducted the audit. However, no anomalies were discovered. Maurice despite having been advised against it, further contracted an independent audit firm to conduct another audit since according to him, there was a possibility of bias during the audit conducted by Carol. Maurice had been well advised that if he was to do so, then the object of the independent audit ought to be to ascertain the veracity of the issues raised and not to evaluate the work of the internal auditor. The independent audit firm did not detect any anomalies. Maurice albeit disappointed further then convened a meeting with the other partners to express his disappointment that Kaldina was performing her duties without consulting him and even held a meeting with Carol to request her to be ‘more credible’ with her audit. The challenge of being requested to alter an audit report is one of the many challenges an internal auditor caught up in the politics of the organization would ordinarily face. Maurice was vindictive and was jealous of Kaldina’s exemplary performance and as a result hoped Carol would report what he preferred by requesting her to be “more credible”. A research report from the Institute of Internal Auditors Research Foundation (IIARF), The Politics of Internal Auditing, found that; • 55 per cent of Chief Audit Executives surveyed said they had been directed to omit or modify an important audit finding at least once, with 17 per cent indicating it had happened three or more times. • 49 per cent reported they were directed to not perform audit work in an area that the Chief Audit Executive viewed as high risk. • 32 per cent said they were directed to perform work in a low-risk area so that an executive could investigate or retaliate against another individual. Preventing stains from the mud Is it possible for the internal auditor to prevent ‘the mud’ from occurring? No. An internal auditor cannot prevent the existence of organizational politics neither can they change human character. However, the damage of the stains that would occur from touching or falling into the mud can be prevented. There are various mechanisms that can be implemented by the internal audit department to prevent damage from stains of touching or falling into the mud. According to me, although there are possibly others, there are two key mechanisms I believe would prevent damage from the stains of organizational politics; Honesty and emotional intelligence. Carol conducted the audit despite the fact that she knew it may not have been necessary to do so. Nevertheless she conducted the audit anyway as she had been officially requested to do so. Carol further stuck to her findings and despite pressure from Maurice, to alter the report, chose to be honest and stood her ground even at the possible risk of losing her job. Honesty is key to preventing the effects of organizational politics. If Carol, had perhaps been dishonest, she probably would have been the next victim of ‘the mud’ such that her integrity would then become questionable had the report been further interrogated by an objective party. Emotional intelligence is the management of one’s own emotional state to regulate behavior. Maurice contracted an audit firm to perform the work previously conducted by Carol because he had doubts. As you can imagine this would irk anyone but Carol controlled her emotions and maintained the findings of her audit. I conclude my view of ‘organizational politics’ and ‘internal audit’ as follows; the impact of Organizational politics on internal audit is like ‘patients who have died’, that is, just like ‘death ‘which is certain, so is the impact of organizational politics on internal audit. I would therefore propose that internal audit should be like ‘the mortician’ to ascertain the ‘cause of death’ of the patients to prevent further deaths, by constantly developing strategies to reduce the impact of organizational politics on internal audit. MAY - JUNE 2017 13
Page 1 and 2: JOURNAL OF THE INSTITUTE OF CERTIFI
Page 3 and 4: TABLE OF CONTENTS 26 COVER STORY Wi
Page 5 and 6: EDITORIAL Dear Reader, The matter o
Page 7 and 8: Financial reporting and assurance T
Page 9 and 10: Financial reporting and assurance T
Page 11 and 12: Business Practice and Development I
Page 16 and 17: Economy THE IMPACT OF HYPERINFLATIO
Page 18 and 19: Management THE POWER OF PERSUASION
Page 20 and 21: MANAGEMENT UNDERSTANDING THE RISK M
Page 22: MANAGEMENT Gor Mahia fans engaging
Page 25 and 26: Finance and Investment will also ne
Page 27 and 28: Information Technology DATA GOVERNA
Page 29 and 30: COVER STORY Daniel Susskind, a lect
Page 31 and 32: CPA Centre TO LET Structure • Ele
Page 33 and 34: governance the generation of a plan
Page 35 and 36: Public Policy Auditor General Edwar
Page 37 and 38: Public Policy and ensure government
Page 39 and 40: WORK PLACE If you are in the catego
Page 41 and 42: WORK PLACE Wherever, you find yours
Page 43 and 44: WORK PLACE Does this thought ever c
Page 45 and 46: WORKPLACE working remotely and bein
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Page 52 and 53: SOCIETY POSTPARTUM DEPRESSION IS A
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The Accountant-May-June 2017

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