The dance of trust, mutual respect, and effective communication between the Chief Audit Executive (CAE) and the Audit Committee Chair (ACC) is pivotal to the success of any organization.
In my years observing, consulting, and being part of large organizations, the most effective and efficient ones are those where the relationship between the CAE and ACC is rooted in trust, understanding, and transparent communication. This relationship might seem rather straightforward, but it is more nuanced than meets the eye. It’s like a well-choreographed dance where both partners must be attuned to each other’s movements and intentions.
The Foundation: Trust
To say that trust is essential would be an understatement. But trust doesn’t simply appear overnight; it is cultivated over time. The ACC must trust that the CAE will deliver audits that are comprehensive, unbiased, and timely. Simultaneously, the CAE must trust that the ACC will provide the necessary support, resources, and feedback essential for the audit team to function at its best.
I remember a particular situation where an unexpected financial discrepancy appeared in a company I was working with. Panic ensued, but the ACC took a calm approach, confiding in the CAE, requesting a detailed investigation rather than jumping to conclusions. This trust allowed the audit team to work diligently without the added pressure of undue blame, ultimately leading to the resolution of the issue and the fortification of the company’s financial protocols.
Mutual Respect: Recognizing and Valuing Strengths
It’s no secret that both the CAE and ACC bring unique skills to the table. Recognizing and respecting these strengths is the cornerstone of their relationship. The CAE is typically deep into the operational aspects, understanding the intricacies of audit processes and risk assessments. On the other hand, the ACC often brings a broader perspective, considering stakeholder interests and aligning audit activities with the organization’s strategy.
During a strategic pivot in another organization I advised, the CAE identified potential risks in the new direction. Instead of dismissing these concerns, the ACC took them seriously, organizing a joint session with the board to discuss and address these risks. This not only showcased mutual respect but also solidified the importance of the audit function in strategic decisions.
Open Communication: The Bridge of Understanding
Clear, transparent, and consistent communication is the bridge that connects trust and mutual respect. Both the CAE and ACC need to set a communication cadence, be it weekly, bi-weekly, or monthly, ensuring that they are always on the same page.
Their CAE and ACC must institute a practice of “no surprises.” Whether it is good news or bad, they must make it a point to communicate immediately. This practice eliminates any potential misunderstandings or misinterpretations and paves the way for immediate action when required.
Challenges and Growth Opportunities
Like any relationship, the bond between the CAE and ACC will face challenges. Economic downturns, regulatory changes, or internal company crises can strain their collaboration. But it’s in these challenging times that their relationship’s strength is truly tested. Viewing these as growth opportunities rather than obstacles can make a significant difference.
Once, during a regulatory overhaul, the CAE and ACC I knew disagreed on the audit’s approach. Instead of letting this disagreement create a rift, they engaged in a facilitated dialogue, understanding each other’s perspectives. This process not only led to a mutually agreed-upon approach but also deepened their relationship, as they navigated the challenge together.
Looking Ahead: Building the Future Together
The dynamic between the CAE and ACC is ever evolving. As the business landscape changes, so will their roles and relationship. Staying ahead of these changes, investing in continuous learning, and regularly revisiting their collaboration terms can ensure longevity and effectiveness.
Conclusion
In conclusion, the relationship between the CAE and ACC is akin to a partnership, where both parties bring their strengths, vulnerabilities, and commitment to the table. It’s a dance of intricate steps, where trust, respect, and communication form the rhythm. For organizations to truly thrive, it’s crucial to invest in fostering this relationship, ensuring it remains robust, effective, and geared towards a shared vision of success.
The writer is an independent Internal Audit Advisor, Enterprise Risk Management Consultant, and professional trainer. He is the founder and Chief Operating Officer of Redric Consulting, your trusted partner for comprehensive training and consulting services in the fields of Governance, Risk, and Compliance (GRC). With a proven track record in Internal Audit, Internal Control, Compliance, Fraud Risk Management, and Cybersecurity, Redric Consulting empowers your organization and ensures its success.
You may reach out to Frederick on [email protected]
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