shifting the paradigm: a case study in transforming internal audit atlanta iia chapter meeting april...
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Shifting the Paradigm:A Case Study in Transforming Internal Audit
Atlanta IIA Chapter MeetingApril 2013
Presenters’ Overview
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Randy Earley – VP of Audit Services— 1.5 years at Cox Enterprises— 28+ years in Audit— Industries: Retail; Financial Services; Telecom; Manufacturing; Media;
Automotive— Previous Employers: JCPenney; Citigroup; Nortel Networks; Flowserve;
SuperMedia— Certifications: CIA; CISA; CRMA; CRISC
Elton O’Neal – Advisory & Assurance Director— 5.5 years at Cox Enterprises— 11+ years in Audit and IT— Industries: Telecom; Media; Automotive; Manufacturing— Previous Employers: Deloitte; International Paper— Certification: CISA
Cox Enterprises Overview
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Cable Television
Telephone
Internet Access
Telecommunications
Advertising Solutions
$9.6B2012
Revenues
Vehicle Auctions
Repair Services
Certification Services
Web Tech Products
Financing Products
$2.7B2012
Revenues
TV/Radio Stations
Newspapers
Ad Sales Rep Firms
Valpak
Cox Digital Solutions
$1.9B2012
Revenues
Online Auto Ads
Kelley Blue Book
vAuto
HomeNet
Automotive
VinSolutions
$1.2B2012
Revenues
Cox Enterprises is the nation’s largest, privately-held media and broadband communications company. Headquartered in Atlanta, Cox Enterprises' 2012 revenues are more than $15 billion, and the company has more than 50,000 employees nationwide.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Cox U.S. Market Reach
Today’s Discussion
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The Impetus for Change
Our Plan vs. Execution of Our Plan
Our Most Compelling Strategies
Measuring Success
Our Prologue
The Domino Effect
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Questions that could not be answered…
Poor Employee Surveys Results (outlier from the
rest of the org)Change in
Org Reporting
Changes in Audit
ProfessionNo Change in Dept Strategy for 15 Years
“Are you the right size?”“Are you spending time in the right places?”
Where We Were
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
PEOPLE: Big 4 external audit alum (mostly SOX experience)
AUDIT PLAN: Cyclical annual plan based on revenue and time
CAREER PATH: Outplacement within Cox to Accounting/Compliance
TECHNOLOGY: Industry tools for audit planning and execution
DEPT VISION/STRATEGY: Aligned with business need
Strategic Assessment Results
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Copyright © 2010 Deloitte Development LLC. All rights reserved.
INTERNAL AUDIT MATURITY AND VALUE CONTINUUMORGANIZATION &PEOPLE
COMPETENCY Financial Financial & Operational Financial, Operational
& Strategic
GOVERNANCE No Involvement Limited Involvement Internal Audit as
Advisor/Facilitator
CHARTER/ROLE
Financial Controls &Compliance with Policy
Financial Controls &Operational Effectiveness
Business Controls &Risk Advisor
PROCESSES &
METHODOLOGIES
RISK FOCUS Financial & Compliance Financial, Compliance & Operational Enterprise Risks
METHODS SOX controls & Compliance Checklists
Process & ControlsInternal Audit Programs Risk Intelligence Frameworks
REPORTS Financial & Compliance Issues
Process & Operational Improvements
Proactive Risk/TrendsAnalysis & Reporting
STAKEHOLDER &TECHNOLOGY
STYLE Corporate Police/Reporter Consultative Trusted Advisor
PERSPECTIVE Historic/Reactive Current Proactive/Future
TECHNOLOGY Basic Project Management &
Administrative SystemsData Analysis & Continuous Auditing/Monitoring
Perceived Current State
Desired Future State* Strategic Assessment Review (SAR) completed by Deloitte in
December 2010.
Feedback from Our Customers
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
“… majoring in the minors.”
“A paradigm shift is in order….”
“… need an approach to prioritize [risks].”
“… too much focus on things that don't matter.”
“… staff is long on compliance, short on strategy/ops.”
The Start of Our Journey:Tweaking Our Compass
Deloitte’s Action Plan Roadmap
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Q4
2010Deloitte’s Strategic Assessment completed
Jan-Feb 2011Confirm management expectations
Scope Risk Assessment Phase I
Mar-May 2011Conduct a comprehensive risk assessment
Jun 2011Develop an expanded audit risk universe & audit plan
Jul 2011Report out Risk Assessment results
Develop organization and skill set requirements
Jul 2011+Rebuild methodologies, processes, and technologies
Aug 2011+Enhance reporting and communication practices
Scope Risk Assessment Phase II
Our Immediate Next Steps
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Performing benchmarking– Other companies– Online tools/services
Collaborating with a transformation partner– Risk Assessment processes– Talent Management processes
Our Transformed Vision
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
PO
RTFO
LIO
OF
SER
VIC
ES
AUDIT SERVICES VISIONO
RG
INFR
AS
TR
UC
TU
RE
STRATEGY AND VISION (UPPER MANAGEMENT)
TECHNOLOGY & TEMPLATES
METHODOLOGY & FRAMEWORK
PERFORMANCE METRICS
TALENT MANAGEMENT
PROJECT RESOURCES (MIDDLE MANAGEMENT & STAFF)
INP
UTS
ASSURANCE
PROTECT
ADVISORY
ENHANCE
STRUCTURED
OBLIGATIONS
DYNAMIC IDEAS FROM RISK ASSESSMENT, STAKEHOLDER MEETINGS, INDUSTRY PRACTICES, AND COMPANY
STRATEGIES/GOALS
VERIFY
Our Transformation Roadmap
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
PLAN
PLAN Enterprise Risk
Assessment 2011 Audit Plan Update
Q2 Project Scheduling & Plans
30 DAYS 60 DAYS 90 DAYS 120 DAYS 120+ DAYS
OR
GA
NIZ
ATIO
N
&P
EO
PLE
CHANGE MANAGEMENT/PROJECT MANAGEMENT
JAN 2011
PR
OC
ESS
ES
&
METH
OD
OLO
GIE
S
STA
KEH
OLD
ER
& T
EC
HN
OLO
GY
PLANCOMPETEN
CY
GOVERNANCE
CHARTER/ROLE
RISK FOCUS
METHODS
REPORTS
STYLE
PERSPECTIVE
TECHNOLOGY
PLAN
PLAN
New AS Org Structure Inventory of Existing Skill
Sets
Coordination with CEI HR New Recruiting
Requirements
AS Training Plan AS Talent Management
Plan
Business Leader Program AS Emissary Program
Transformation Steering Committee
2011 Budget Update Mission/Vision Statement
New AS Charter
Audit Program Rationalization
Process Analysis Framework
Project Selection & Scoping
Project Staffing Strategy
PLAN Reporting Methods Reporting Formats
Reporting Tools
PLAN AS Corporate Rebranding AS Management Org /Role
Stakeholder Feedback Loop
PLAN Audit Transformation
Benchmarking End-to-End Transformation
Work Plan Transformation & Dept
Metrics
PLAN Technology Requirements Data Requirements
Tech Tools Research Tech Tools Selection
Technology Implementation Roadmap
WORK STREAM
Our Transformation Roadmap
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
PLAN
PLAN Enterprise Risk
Assessment 2011 Audit Plan Update
Q2 Project Scheduling & Plans
CHANGE MANAGEMENT/PROJECT MANAGEMENT
PR
OC
ESS
ES
&
METH
OD
OLO
GIE
S
STA
KEH
OLD
ER
& T
EC
HN
OLO
GY
RISK FOCUS
METHODS
REPORTS
STYLE
PERSPECTIVE
TECHNOLOGY
Audit Program Rationalization
Process Analysis Framework
Project Selection & Scoping
Project Staffing Strategy
PLAN Reporting Methods Reporting Formats
Reporting Tools
PLAN AS Corporate Rebranding AS Management Org /Role
Stakeholder Feedback Loop
PLAN Audit Transformation
Benchmarking End-to-End Transformation
Work Plan Transformation & Dept
Metrics
PLAN Technology Requirements Data Requirements
Tech Tools Research Tech Tools Selection
Technology Implementation Roadmap
Despite building a comprehensive plan for 2011, our greatest needs and gaps from our stakeholders’ perspectives were focused on two distinct areas.
So, our true transformation was focused on:
RISK FOCUS
COMPETENCY
Three Year Vision (circa 2011)
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
2011TRANSFORM
2012BUILD
2013STABILIZE
RISK FOCUSCOMPETENC
Y
EVERYTHING ELSE
INTERNAL IMPROVEME
NTS
We identified our greatest needs and gaps,and then addressing them became
the foundation of our transformation.
Exploring New Territory:Our 1st Risk Assessment
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Our Risk Assessment Approach
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
April 2011
Q12012
2012 &
Beyond
Overall Approach
Point-in-Time assessment featuring 60+ stakeholders from CCI, MAN, and CEI
Target audience: VPs and Directors
Risk ranking performed internally by Audit mgmt team and Deloitte
Update of 2011 results featuring stakeholders from all Cox Divisions
Target audience: EVPs and SVPs initially (top-down approach)
Risk ranking vetted through Cox Divisional stakeholders
Ongoing function and responsibility of VP and Director roles
Target audience: EVPs/SVPs quarterly; VPs/Directors monthly
Quarterly validation of risk identification and ranking
Focused Risk Heat Map
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
2 1
3 4
67
9
810 11
1213
14
16
5
15
17
18
IMPA
CT (
Inh
ere
nt
Ris
k)
VULNERABILITY (Residual Risk)
# RISKAUDIT
COVERAGE IT 1 Current State DR2 Information Security3 Future Growth DR 4 Growth Infrastructure 5 IT InvestmentsSTRATEGIC6 Maturing Market 7 Innovation Incubation 8 Organizational Effectiveness9 Transformation/Centralization 10 Market Response Time OPERATIONAL11 Data Governance12 Business Intelligence 13 Inventory PlanningFINANCIAL14 Investment Integration15 Investment Due Diligence16 Internal Controls COMPLIANCE17 Company Policies 18 E-Rate/Lifeline Compliance
White diamonds indicate areas of current Audit coverage.
The Iterative Process
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Hold risk and relationship management interviews with key stakeholders (SVPs, VPs, and Directors)
across business units
Debrief executive
stakeholders on risk update
Debrief executive
stakeholders on risk update
Going Off-Road:Talent Assessments
Assessing Our Current Staff
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Required across the organization in order for
leaders and professionals to be
successful
Needed for success in a particular job
family or position/level
Focused on a specific job role
or the application of specific knowledge
Technical Competencies
ProfessionalCompetencies
Leadership
Competencies
Our New Operating Model
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
VPVP
Dir
ecto
rD
irecto
rM
an
ag
er
Man
ag
er
Sp
ecia
list
Data
An
aly
st
Sp
ecia
list
Data
An
aly
st
Project Execution& Project Delivery
Project Management& People Development
Vision& Strategy
Planning& Operations
Delivery
Delivery
Relationship Management& Operationalization
COLLABORATION – CASH FLOW – CUSTOMERS – COMMUNITY
Building a Talent Assessment Center
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Measure of Candidate Potential
Interviews
Psycho- metrics
Simulations
+Consensus
Final Decision
Critical Success Factors? Well-defined job descriptions and competencies Well-defined decision-making methodology Well-trained and dedicated Assessors Well-organized logistics (free from distractions)
How? Develop a highly objective and scalable
process Assess performance against clearly defined
competencies Use realistic, work-based scenarios to
predict future potential Develop standardized scoring and success
measures
Our Assessment Process
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Candidates
Assessment
Workforce Transition
Types of Assessments Analytical Fit Behavioral Fit Position/level Fit Cultural Fit
Personnel Requirements 3 – 8 Candidates 6 – 16 Assessors
Timeframe: 5 Weeks Recruiting/Initiation as
Needed Full Day of Exercises Same Day Decisions
Paving a New Path
Department Priorities thru Transformation
Technology Tools
Methodology Project Data
Change Mgmt Stakeholder Mgmt Communication
Plan
Recruiting Staff Training Co-Sourcing
AutoTrader.com Cox Media
Group Phase I Follow-
UpRisk
Assessment Phase II
Talent Manageme
nt
DeptInfrastructu
re
BrandBuild-Out
Projects
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Where We Are Today
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
PEOPLE: Diverse mix of Big 4 alum and mgmt consultants
AUDIT PLAN: Rolling 6-month, risk-based plan
CAREER PATH: Outplacement within Cox to varied career options
TECHNOLOGY: GRC implemented; technology and data roadmap
DEPT VISION/STRATEGY: Strategic business partner
Three Year Vision (circa 2012)
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
BUILD Complete 2012 Audit Plan
within the approved budget
Standardize methodologies & implement technology solutions to drive efficiencies
Finalize talent mgmt and recruit to full headcount
Pilot the business leader development program
2012 2013 2014
People – Build competency and proficiency to support a best practice, world class internal audit function and serve as a springboard for Cox leadership
Process – Develop and operationalize internal processes to be as efficient and effective as possible while being aligned with Cox strategies and management’s intentions
Technology – Implement solutions expanding risk coverage and achieving efficiencies that will allow us to focus on value enhancement without compromising the oversight of risks and controls
STABILIZE Complete 2013 Audit Plan
within the approved budget
Rotate projects and resources through each DIV quarterly
Complete one full rotation of the business leader development program
Maintain full headcount
SUSTAIN Complete 2014 Audit Plan
within the approved budget
Graduate 1-2 AS associates to leadership positions within Cox Divisions
Maintain full headcount
Reassess alignment of department services with stakeholder needs
Our Current Org Structure
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
PwC Staff/Seniors
Director SME Director SME
Vice
President
Exec
Assistant
Advisory & Assurance Manager
Advisory & Assurance Specialist/Data Analyst
PwC Subject Matter Resources
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
OUTPLACEMENTOUTPLACEMENT
PROMOTION
ADVISORY & ASSURANCE SPECIALIST
OUTPLACEMENTOUTPLACEMENT
PROMOTION
ADVISORY & ASSURANCE MANAGER
OUTPLACEMENT
ADVISORY & ASSURANCE DIRECTOR
Major/Minor 12 – 15 projects +100 hours core
curriculum +40 hours IDP training 8 career dev sessions
Functional SME 18 – 22 projects +180 hours IDP training 3 – 5 direct reports 12 career dev sessions
Divisional SME Functional SME 24 – 28 projects +240 hours IDP training 2 – 4 direct reports
(mgmt) 16 career dev sessions
Our Value Proposition to Our Staff
Technology-Enabled Methodology
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Project Selection
Stakeholder
Discussions
Strategy &
Objectives
Risk Assessme
nt
Advisory
Compliance
Prioritization
• By Function• By Division• By Risk
MULTI-LAYER REPORTING CAPABILITY
• Audit Committee• Management (John Dyer)• Stakeholders
AUDIENCE
Assurance
Department Branding
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
The Moral of Our Story:Lessons Learned
The Top 5 Critical Success Factors
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Executive SponsorshipExecutive SponsorshipExecutive SponsorshipPrioritization & CommunicationTalent: Get the right people on the
bus!
Tie your transformation to the things that matter to your
organization.
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Focus of Cox Employee Survey
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Addressed by Transformation
INVOLVEMENT &
BELONGING
LEADERSHIP
PERFORMANCE
MANAGEMENT
RECOGNITION AND
REWARDS
SURVEY FOLLOW-UP
TEAMWORK
VALUES
WORK-LIFE BALANCE
CHANGE MANAGEMENT
COMMUNICATION
COMMUNITY OUTREACH
COMPENSATION &
BENEFITS
CUSTOMER FOCUS
DIVERSITY
ETHICS
FUTURE/VISION
GROWTH AND
DEVELOPMENT
Communicate early, frequently,repeatedly, and transparently!
Don’t be afraid to share your vision and plans, even if you
know they’ll change… and they will change.
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
The Evolution of Our Vision
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Don’t underestimate the effort and time required for every work
stream.
Execution will feel more likerevolution than evolution.
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Talent Assessment Workstream
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Week 0 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6July 15
July 22
July 29
Aug 5Aug 12
Jun July 8
A) Competency Framework &
Mapping
• Develop departmental Competency Framework
• Conduct Job Level to Competency Mapping
D) Assessor & Role Player Briefing
• Develop Assessor Briefing Deck and materials
• Brief Assessors on AC* Methodology and Exercises
• Identify and train role players to deliver consistent experience
A06/29
E08/02 & 08/03
A,B,C,D07/18
B06/29
A,B,C07/08
Aon
HRReview
Legal Review
Audit Team
A,B,C,D
07/19
E) Assessment Center
• Conduct AC* per Job Level per day
Assessment Center Materials / Activities
C) Assessment Center Methodology
/Exercises
• Identify Critical Competencies (for assessment)
• Develop AC* Exercises
• Develop AC* Methodology (schedule, scoring process, AC*templates)
B) Job Descriptions
• Design Job Descriptions
• Validate Competency Framework against Job Descriptions
+ + + =
B,C07/07
D07/15
F) Consensus Meeting
• Determine Successful Candidates
&
F08/05
F08/05
D07/08
G07/27
H08/12
H08/12
Complex doesn’t mean better.
Strive to streamline and simplify your transformation roadmap and
solutions.
Why?
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Project delivery is still expected.
Exceeding expectations on project delivery will give your transformation tremendous
momentum.
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How did we measure success?
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
Candidly positive stakeholder feedback– On both new state and old state
Steady flow in our project pipeline– New types of projects: strategic and
operational
Highly engaged Audit staff– Positive 2012 employee survey results– Project staffing shifted from capability to
bandwidth
Thank you for your attention!
Questions?
randy.earley@coxinc.com
elton.oneal@coxinc.com
CONFIDENTIAL & PROPRIETARY to COX ENTERPRISES AUDIT SERVICES
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