The Accountant-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