Opinion: How I managed to achieve audit nirvana

Peter Cardy, chief executive of Macmillan Cancer Support

I know I should get out more, but one of the satisfactions of my job is having an internal audit service that really works as an aid to management. For many charities it would be a frank extravagance to have both independent and internal audit. But quite a lot of charities that could afford internal audit regard it only as nice-to-do - but it really is worth thinking again.

The first real internal audit service I encountered was when I was an NHS non-executive in the 1990s. Purchaser-provider arrangements were decaying only a few years after their introduction - old NHS accounting habits were as durable as cockroaches after nuclear attack. My trust was a conglomeration of independent fiefdoms, long undisturbed by management. To make a surplus was a cardinal sin.

Enter Group Internal Audit, who did their best with unpromising material.

They were shared by my trust and several others. Ours included a Victorian asylum, an architectural jewel and management nightmare - just keeping it watertight cost more than feeding all the patients. And how do you audit the maintenance of an Edwardian fire engine and the pond that provides its water supply?

I have lived with dysfunctional internal audit services, not uncommon in the sector. One was run by an ex-bank manager who couldn't add up.

A refugee from a merchant bank could see the management solution but couldn't describe the problem. Another was a kind of secret police force that swooped with little warning and allocated blame liberally. Our meetings were filled with reproaches and apologies.

But finally I have achieved audit nirvana, where the internal auditors see their job as being to support management, and the managers enjoy working with them. Their ability to spot things that are out of line is uncanny.

Sometimes it's numbers, more often it's managerial controls or unquantified risk. They ease staff into lateral thinking, connecting data with outcomes so fluently we all think it's our own idea. The management accounts provide a snapshot of the regular measures, while the auditors look at what lies beneath.

And if they see something very wrong? The internal auditors have direct access to the board's audit sub-committee; they can bypass me and all the directors if they need to. It hasn't yet happened, but it's an essential protection for the charity. I recommend it.

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