For the times, they are a changing in the internal audit profession.

You can choose to stick your head in the ground and ignore what’s going on, but you may end up like some CAEs who just got let go from their positions for sticking with a traditional internal audit mindset.

In this week’s podcast I share why Traditional Internal Audit is dying. We’ve been seeing this for years, but I share with you some recent events and evidence that prove again that this is the trend we are seeing.

If you are still spending most of our time auditing lower level process controls and focusing on historical events and internal controls, you are probably stuck in the traditional rut and need to start working your way out by transitioning to a true risk-based internal audit methodology.

Value-based auditing, objective-based auditing vs. risk-based internal auditing I also discuss in this episode.


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Jason Mefford: Welcome Back my Friends to another episode of jammin with Jason. Hey, thanks for hanging out with me again this week.

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Jason Mefford: Now before we get into talking about our topic this week that traditional internal auditing is dying. Ooh. Sounds kind of scary, right.

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Jason Mefford: But I’ll get into that and explain why I’m actually saying that there’s there’s been some things that have come to my attention, the last week or two that just kind of go again in that vein that I wanted to make sure and share with you.

00:00:38.160 –> 00:00:43.440
Jason Mefford: But before we do that I wanted to do a couple of quick shout outs to some listeners.

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Jason Mefford: Because, as I’ve told you before you know i i do this podcast each week for you and love to hear feedback from people

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Jason Mefford: So if you’re listening to this, you know, make sure and connect with me on LinkedIn, send me a direct message. Let me know what you like about the podcast and you may be featured here in the future.

00:01:06.150 –> 00:01:13.740
Jason Mefford: So this week. I wanted to do a shout out to Todd and I think it’s M is how you say it. Em, Gee. So, Todd.

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Jason Mefford: Todd says I’m a weekly listener of your podcast, which is always insightful and he found it through a shared contact

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Jason Mefford: He says I regularly walk away with new insight that I try to apply to my life and career. Thanks for the great resource. Well, Todd. You are welcome.

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Jason Mefford: I’m glad that you’re listening each week. And the point that I really liked about what you said there, too, is that you walk away with new insight.

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Jason Mefford: That you try to apply to your life and career in my friends. That’s what I am hoping each of you are doing that you’re getting insights that you’re looking at things, but that you’re not just listening, but that you’re actually starting to apply these things to your life and your career.

00:02:05.670 –> 00:02:10.440
Jason Mefford: Because ultimately, yeah, I can sit here and entertain you, you know, for a half an hour or so each week.

00:02:11.040 –> 00:02:15.960
Jason Mefford: But if you really want the transformation. And if you want your life and career to be different.

00:02:16.470 –> 00:02:27.270
Jason Mefford: You need to get out and actually start applying some of these things that I’m talking about. And so, you know, just like most of the other episodes. I’m I try to give you some things today.

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Jason Mefford: To think about, but please, please, please go out and actually apply some of these things and change your life change your career. That’s why I do this. Okay, now

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Jason Mefford: I also wanted to let you know before we get into the episode as well.

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Jason Mefford: I have started. I think I mentioned before, I’m probably going to go to two a week. Well, I am going to to a week now. So there will be two episodes each week and I’m and so there’ll be the normal episode on Tuesday that comes out.

00:03:01.020 –> 00:03:08.370
Jason Mefford: And usually on Tuesday, it’s always going to be original content. So it’ll be new, new episodes that haven’t aired before

00:03:08.880 –> 00:03:18.480
Jason Mefford: And then on Friday, I’m doing what’s called flashback Fridays. Okay, so a lot of the Friday episodes. I will give you something to listen to over the weekend.

00:03:19.470 –> 00:03:36.480
Jason Mefford: Most of those flashback Friday episodes are some best lives. So they’re going to be replays of some of the most listened to episodes or the ones you know again that I think can have the biggest impact, excuse me on helping you to transform your life in your career.

00:03:37.590 –> 00:03:45.900
Jason Mefford: So watch for those. There was one, actually this last Friday. That was a there was a replay. We did our first flashback Friday. This last week.

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Jason Mefford: So you can find that there and again there will be new episodes or there’ll be episodes each Friday as well.

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Jason Mefford: Like I said, they’ll either be flashback Fridays, which are repeats of some of the most listened to podcasts and you might be sitting there saying,

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Jason Mefford: Why do I need to listen to it. If I’ve already listened to it before. Well, I go back and listen to certain podcasts that I’ve listened to before a second or third time.

00:04:13.440 –> 00:04:19.290
Jason Mefford: Because usually, we will get something out of it, different each time that we listened to it.

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Jason Mefford: And so again, you know, I’m big on learning and repetition is one of those ways for us to learn. So going back and listening to some of the past episodes will be good. It’ll help you

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Jason Mefford: The other thing is on Fridays. I’m, you know, most of the time on Tuesdays. We’re talking about internal audit risk management or compliance type topics things that relate to

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Jason Mefford: Specifically kind of professionals in those areas and chief audit executives, but some of the Friday episodes. I’m going to actually do some

00:04:51.090 –> 00:05:04.230
Jason Mefford: New content episodes as well on Friday. Those are going to be more, you know, kind of whatever I feel like talking about so they may or may not necessarily relate to your business career.

00:05:04.980 –> 00:05:12.900
Jason Mefford: But they’re going to be things about you know psychology music mindfulness. Other things that are important things that I feel like talking about

00:05:13.710 –> 00:05:32.070
Jason Mefford: That will also improve your life as well. So some of those may or may not be as business related but again there’s a lot of things that I want to share with you and figured that I got to be putting out more than one a week to be able to get the content to you. Okay.

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Jason Mefford: One more little housekeeping thing and then let’s jump into what we’re going to talk about today.

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Jason Mefford: The other thing, again, is if you are enjoying listening to the podcast, please share this with other people.

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Jason Mefford: You know, I did the shout out to Todd. How did Todd, find the the podcast. Well, one of his one of our shared contacts actually suggested it to him.

00:05:56.850 –> 00:06:06.990
Jason Mefford: So if you’re enjoying it. Other people are probably going to enjoy it as well. So do me a favor. This week just reach out to five people that you know

00:06:07.770 –> 00:06:14.280
Jason Mefford: And say, hey, this. This podcast is great. Go take a listen to it. You know, you can also post on social media.

00:06:14.970 –> 00:06:23.430
Jason Mefford: You know, again, post on there and say, Hey, I just listened to this podcast episode. It was amazing. You should go out and listen to it as well.

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Jason Mefford: tag me on that. So I can jump into the conversation. I would really appreciate that as well because like I said, I’m trying to

00:06:32.730 –> 00:06:45.060
Jason Mefford: You know, help people get these new insights and start applying some of these things to their life and career. Okay, so go out and share because sharing is caring

00:06:45.750 –> 00:06:56.100
Jason Mefford: Now today, you know, again, our title is traditional internal audit is dying, and I want to kind of start off giving you a little history lesson.

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Jason Mefford: And talking a little bit about history in you’ll see, just bear with me, you’ll see how this ties into our topic for today.

00:07:06.120 –> 00:07:17.730
Jason Mefford: But if you’ve been following me for a while, you know that I like music and I love rock and roll. And so I wanted to start off talking about Elvis, the King of Rock and roll. Okay.

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Jason Mefford: And Elvis, you know, in the mid 50s started you started playing started getting some success. People were liking his music. It was different than most of the things that they’d heard at the time. And so his popularity started going up.

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Jason Mefford: But a lot of people at the time, looked at him and here he was this long haired guy that kind of had this greasy pompadour and he looked really kind of different than then you know most people did.

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Jason Mefford: And when he would perform he do some weird things like each shake his hips and he’d kind of dance around and make these funny.

00:07:58.140 –> 00:08:06.090
Jason Mefford: funny faces. Actually, if you go back and listen to some of the old or look at some of his old performances, where he kind of snarls up his mouth and does some different things like that.

00:08:06.810 –> 00:08:17.970
Jason Mefford: But obvious to everybody at the time, Elvis was a little bit different. He didn’t fit the mold, you know, at that time, most people were listening to big band music

00:08:18.900 –> 00:08:28.290
Jason Mefford: You know they were they were listening to what we call a Crooners people like you know Bing Crosby Frank Sinatra. I love both being and Frank

00:08:29.040 –> 00:08:39.480
Jason Mefford: Myself, you know, great, great singers, but that was mainly what people were listening to and so when this rock and roll thing came along, it really shook up a lot of people and

00:08:40.680 –> 00:08:54.180
Jason Mefford: And what really shook up a lot of people are what really started things going was September 9 of 1956 now I know most of you that are listening, and this was even before I was born.

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Jason Mefford: But September 9 of 1956 something really important happened. And here’s what it was Elvis ended up going on The Ed Sullivan Show.

00:09:07.110 –> 00:09:15.810
Jason Mefford: And he performed on The Ed Sullivan Show, which at the time was the the most watched TV program in the United States.

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Jason Mefford: Now, Ed Sullivan did not like Elvis. In fact, he did not like rock and roll. He did not like Elvis. He did not want Elvis coming on his show. In fact, he had he made some comments to the effect of, you know, Elvis will never be on my show. Okay. And he said, some of those things publicly to

00:09:35.970 –> 00:09:53.340
Jason Mefford: That was until one of his competitors Steve Allen actually had Elvis perform on the Steve Allen show and it had huge ratings and so it forced Ed Sullivan to actually kind of recant and come back and say, okay, well,

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Jason Mefford: I said I’d never have Elvis on here but instead he paid Elvis $50,000 to come on his show. Okay. Now, again, I told you, Ed, did not like Elvis. And so he made sure you know when when Elvis came on, he told the the TV. The camera crew.

00:10:12.150 –> 00:10:19.530
Jason Mefford: You know this guy likes to shake his hips and and and dance around. So make sure that all of your shots are above the waist.

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Jason Mefford: Because we don’t want him gyrating and that’s just not appropriate kind of stuff. Okay, so he had told him that. Now, the problem was.

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Jason Mefford: They, they couldn’t hold on to that. Right. So the first show. It was really kind of waist up.

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Jason Mefford: But after that, you know, they really couldn’t do it. It had to do more of the full body shots because that’s what people wanted. Now, what I will tell you that’s that first show September 9 of 1956 is such an important date in rock and roll history.

00:10:51.360 –> 00:10:56.520
Jason Mefford: There were lots of people all over the world. And I’ve heard interviews from lots of the top

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Jason Mefford: You know, rocking gods and goddesses, if you will, that they were watching the Ed Sullivan Show and they saw Elvis and something inside of them clicked.

00:11:09.990 –> 00:11:23.460
Jason Mefford: And many of these people were inspired by Elvis and decided to become musicians. Now if you know on September 9 1956 one of those people that was probably listening.

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Jason Mefford: Was a little boy in Minnesota named Robert Allen Zimmerman, and most of you probably haven’t heard of Robert Allen Zimmerman. He was a young boy that grew up in Minnesota.

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Jason Mefford: But I’m guessing again at that day, you know, on that day he was probably watching the Ed Sullivan Show with his family.

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Jason Mefford: And I’m sure again that there was something that was pricked in him and led him to become a musician. In fact, he is probably one of the most famous musicians of all time.

00:11:58.800 –> 00:12:18.420
Jason Mefford: And many of you have never heard of Robert Allen Zimmerman. And the reason for that is because Robert changed his name when he went into show business because Robert Allen Zimmerman is a mouthful. And so instead he chose to change his name to Bob Dylan.

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Jason Mefford: And I’m sure that most of you listening have heard of Bob Dylan and

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Jason Mefford: The influence that that had and I’m going to tie this all back to internal audit again here in just a minute, is that, you know, Bob Dylan went on to become probably

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Jason Mefford: You know, one of the most respected and he also influenced other people. In fact, to the point that Bob Dylan is a Nobel laureate, so he actually won the Nobel Prize for Literature.

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Jason Mefford: Because of the poetry that was included in his music and because of the social impact that he had on the world through his music and through other people

00:13:05.700 –> 00:13:16.980
Jason Mefford: Now again, you know, if we go back to Elvis. Like I said, Elvis actually inspired many of the people who led the revolution, the Rock and Roll revolution.

00:13:17.490 –> 00:13:32.310
Jason Mefford: And, you know, Elvis by himself. He became the top selling solo artist of all time until a few years ago when Garth Brooks actually took over that lead but but huge impact. Right. And again,

00:13:33.330 –> 00:13:47.280
Jason Mefford: It was somebody at the time that when he started playing and even when Bob Dylan started playing people would look at them and think these people are crazy. They don’t know what they’re talking about. Right. Even to this day, you know, my, my father.

00:13:48.390 –> 00:13:51.990
Jason Mefford: You know thinks Elvis as an idiot. He just didn’t know what he was doing. Right.

00:13:52.650 –> 00:14:10.020
Jason Mefford: But but Elvis had this impact on so many people. In fact, it even cross the pond over in England, you know, another little group that you might have heard of called the Beatles Elvis was a huge, huge influence on them as well.

00:14:12.060 –> 00:14:25.920
Jason Mefford: So, where, where am I going with this. Well, you know, again, in our profession. We’ve been going along, you know, for a long time kind of doing the same old traditional kind of stuff.

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Jason Mefford: And and I won’t get into all the history today because I’ve talked about it a lot of other places.

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Jason Mefford: But, you know, we’ve really been a lot of internal auditors have pretty much been doing the same kind of auditing that has been done for 200 years

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Jason Mefford: Now I know a lot of people would stand up and say, No, no, no, no, that’s not the case. Well, it is if you go back and actually take a look at it. And what’s happening today in our profession is the same thing that was happening to rock and roll in the 50s and 60s.

00:14:58.560 –> 00:15:06.810
Jason Mefford: There was this traditional music and there were people like Ed Sullivan. There’s people like Ed Sullivan in our profession, who say, oh, I don’t like these people

00:15:07.110 –> 00:15:24.540
Jason Mefford: They don’t talk about the right things. It’s not traditional it’s not right. Okay. And the same thing is happening in our profession today. But I’ll tell you you can’t stop it. Just like Elvis showing up on The Ed Sullivan Show September 9 of 1956

00:15:25.770 –> 00:15:34.980
Jason Mefford: Rock and Roll was here to stay, and it wasn’t about to come back. It didn’t matter how many people would stand up and beat their chests and say how horrible it was, you know,

00:15:35.490 –> 00:15:50.130
Jason Mefford: Funny side story I told you my dad. My dad never really liked Elvis. He didn’t like the Beatles either okay and this one day we were we were driving to work. He was a contractor and I used to go to work with him, starting when I was about eight years old.

00:15:51.720 –> 00:15:58.890
Jason Mefford: And we were in the summertime between school. I still went to school as well. But in the summer, we were you know we were driving to work.

00:15:59.430 –> 00:16:12.900
Jason Mefford: And he was listening to his easy listening music. It was really music that had been put to an orchestra. Okay. And so he sitting there humming along, you know, to this song, what’s going on. And I said,

00:16:14.370 –> 00:16:22.920
Jason Mefford: This pretty good song dad and he said, Oh yeah, this is a great song. I love this song. And, you know, because it didn’t have any words to it. It was just the music. And I said,

00:16:23.400 –> 00:16:32.370
Jason Mefford: You know, Dad, do you know who you know who wrote that song. And he said, oh, I don’t know. I like the song. It didn’t really matter. I said, well, Dad. The Beatles wrote that song.

00:16:32.970 –> 00:16:36.240
Jason Mefford: And he said, Oh, no, this is a great song. The Beatles couldn’t have written that right

00:16:37.230 –> 00:16:45.570
Jason Mefford: Kind of thing. Okay, so what I, what I’m saying is just like the traditional music of the big band.

00:16:46.080 –> 00:16:55.230
Jason Mefford: And a lot of the Crooners in the 50s and 16 was slowly dying, people didn’t want to admit it. Okay. But the problem was, things were actually changing

00:16:55.800 –> 00:17:05.700
Jason Mefford: And let’s go back to Bob Dylan, one of the songs that he is most recognized for and that you’ve heard me refer to before, is the times they are a changing

00:17:07.020 –> 00:17:20.850
Jason Mefford: And it’s such a beautiful song as well as from a lyrical standpoint, you know, and, and again, you probably know how this all starts off right come gather around people where you may row home.

00:17:21.330 –> 00:17:33.450
Jason Mefford: And admit that the waters around you have grown and soon. Soon you’ll be drenched to the bone. If your time to you is worth saving.

00:17:33.900 –> 00:17:44.460
Jason Mefford: Then you better start swimming or you’ll sink, like a stone for the times they are changing. Okay. You know how that song starts right

00:17:45.060 –> 00:17:53.100
Jason Mefford: But you know there’s some very poignant lines in here and and you know one of the verses in particular, I just want to read to you.

00:17:53.460 –> 00:18:01.020
Jason Mefford: At this point, because I think, again, this captures what we are going through in our profession at this time.

00:18:01.740 –> 00:18:14.670
Jason Mefford: And it says, Come mothers and fathers. Okay, and mothers and fathers are kind of those those authoritarian the the people that kind of control everything. They’re the leaders, they’re the ones that tell us what to do. Right.

00:18:15.900 –> 00:18:24.750
Jason Mefford: So translate this into your own career and into internal audit. Okay, it’s what I’m trying to get you to do. So come mother come mothers and fathers throughout the land.

00:18:25.200 –> 00:18:37.290
Jason Mefford: And don’t criticize what you can’t understand. Okay. And again, I told you that story about my dad. My dad would critic criticized rock and roll. Because he didn’t understand it.

00:18:37.800 –> 00:18:58.110
Jason Mefford: It didn’t fit into his model of the world and he couldn’t understand it. And a lot of people that have been have been, you know, growing up and have been doing traditional internal auditing for so long. They cannot understand that there would be a different way to actually audit. Okay.

00:18:59.220 –> 00:19:08.130
Jason Mefford: So come mothers and fathers throughout the land and don’t criticize what you can understand your sons and your daughters are beyond your command.

00:19:08.790 –> 00:19:20.580
Jason Mefford: Your old road is rapidly aging, please get out of the new one. If you can’t lend your hand for the times they are a changing

00:19:21.060 –> 00:19:29.310
Jason Mefford: And again, the times are changing in our profession, my friends. And, you know, if you happen to be one of those people that still kind of stuck in the traditional rut.

00:19:29.970 –> 00:19:38.430
Jason Mefford: Well, if you, if you’re not willing to help and try to create the new internal auditing and actually help change our profession.

00:19:38.790 –> 00:19:45.630
Jason Mefford: Then please just get out of the way and let those of us that are trying to make an impact do what we need to do.

00:19:46.170 –> 00:19:57.330
Jason Mefford: Don’t be a dick like Ed Sullivan and try to say I’m not gonna let Elvis show up on stage because he says things. I don’t want to hear.

00:19:57.990 –> 00:20:16.800
Jason Mefford: Because the future is coming, the times are changing. And if you can’t help please get out of the new road if you can’t lend a hand. But what I would say is lend a hand, folks. Let’s make this world better. Let’s make our profession better as well. Okay, so

00:20:17.970 –> 00:20:29.310
Jason Mefford: I love music and there you go folks. There’s a story about rock and roll and how it really translates back into our particular profession.

00:20:30.150 –> 00:20:36.510
Jason Mefford: Now I told you at the beginning, you know, again, many of you are going to look at this title and go, Jason internal audit is not dying.

00:20:37.260 –> 00:20:44.520
Jason Mefford: Well, let me tell you some information that I came across this last week, and it just confirms a lot of the things that I’ve been seeing now.

00:20:45.270 –> 00:21:04.140
Jason Mefford: You know, starting 2025 years ago, but it’s been speeding up in the last few years, and that is one of the people. One of the chief out of executives that I work with, she she happens to be in the chief audit executive forum that I run. She is in the process of looking for a new position.

00:21:05.490 –> 00:21:13.020
Jason Mefford: And she told me you know there’s this one opportunity that I’m looking at and I’m going through the second and third round interview.

00:21:13.620 –> 00:21:20.100
Jason Mefford: And she said you know it’s it’s really interesting because this position came open just the last few months.

00:21:20.790 –> 00:21:30.750
Jason Mefford: Because the company chose to fire the chief audit executive that was currently there. So this isn’t a new thing. You know where she would be going in and starting a new department from scratch.

00:21:31.860 –> 00:21:39.120
Jason Mefford: This is an internal audit department that was there, but there was a chief audit executive that the board and the executives wanted to remove

00:21:39.870 –> 00:21:54.210
Jason Mefford: Their reason for removing that chief audit executive is they were performing traditional auditing and they were looking for someone who would be more progressive and more risk based

00:21:54.720 –> 00:22:07.050
Jason Mefford: Okay. Boom. There’s a nail in the coffin for internal audit, right, is that, again, if we continue to do what’s called traditional auditing, which is more historical in nature.

00:22:07.410 –> 00:22:26.520
Jason Mefford: Very low level in the processes and internal controls of an organization, the executives and the board. That is not what they want. Okay. They want someone who is more progressive hmm. You know, traditional music to rock and roll rock and roll is more progressive, isn’t it.

00:22:28.050 –> 00:22:39.030
Jason Mefford: They’re seeing this and they’re starting to take action as well. Like I said this last experience. It just adds on to all of the other

00:22:40.170 –> 00:22:48.480
Jason Mefford: Stories and things that I’m hearing about internal audit being downgraded, you know, firing the chief audit executive bringing in somebody at a lower level.

00:22:49.170 –> 00:22:59.700
Jason Mefford: offloading, a lot of the information or a lot of the work that internal audit had done in the past to the compliance department or to the socks department or to other things like that. Okay.

00:23:00.450 –> 00:23:08.400
Jason Mefford: Now if you listen to last week’s episode where I talked with how Garen you know we were talking about relevance and relationships.

00:23:08.790 –> 00:23:17.130
Jason Mefford: And one of the things that we talked about is, you know, you don’t become relevant by telling people you’re relevant

00:23:17.610 –> 00:23:24.420
Jason Mefford: Okay, I can stand up. I can pound my chest like a big gorilla and say, Damn it, you know, internal audit is important.

00:23:24.840 –> 00:23:32.190
Jason Mefford: And I know that because the Institute of Internal Auditors has been around for 80 years and we have standards and we’ve been doing all these things that we’ve been doing

00:23:32.670 –> 00:23:41.160
Jason Mefford: And they say that we’re an important part of the governance structure of an organization, and I must have a seat at the table and you must listen to me.

00:23:41.520 –> 00:23:50.730
Jason Mefford: And I must you know be independent of everyone, and I must do what I need to do and what I feel is the most correct. Okay.

00:23:51.360 –> 00:23:57.930
Jason Mefford: Now people if you’re if you’re standing across the table from somebody that starts talking like that and you’re the CEO of the company.

00:23:58.560 –> 00:24:04.440
Jason Mefford: That ain’t gonna be good. Okay. Because I don’t care what you’re saying. I don’t care what some organization says

00:24:05.250 –> 00:24:19.740
Jason Mefford: I have certain things that I need to fix or there’s certain things that are risks to my organization that I need help with. And I don’t need you coming in and telling me, those kinds of things. Now,

00:24:20.910 –> 00:24:30.060
Jason Mefford: I tell you this with a lot of love as well because I was a chief audit executive. I’ve been on that side, I’ve been an auditor for a lot of my career.

00:24:30.690 –> 00:24:41.340
Jason Mefford: But now I’m a CEO of a couple of different companies. And I see it from the management side as well. I was also a risk, you know, head of risk management ethics and compliance as well.

00:24:41.760 –> 00:24:51.390
Jason Mefford: I see it from the pure side as well. And when we show up kind of all idealistic and tell people that were relevant and you need internal audit.

00:24:53.130 –> 00:25:07.260
Jason Mefford: That’s just not the case. Okay. And while internal audit is important. Let me, let me just give you a few numbers here to explain this because I think a lot of us inside of our vacuum of the profession.

00:25:08.400 –> 00:25:24.060
Jason Mefford: We believe that every organization needs internal audit that is the belief that we have created within our profession, but I gotta tell you, folks. It ain’t true

00:25:24.930 –> 00:25:34.920
Jason Mefford: And some of you are going to be going Jason That’s heresy. I know it’s heresy in our profession. But let me give you some numbers to kind of explain this. Okay.

00:25:35.580 –> 00:25:41.130
Jason Mefford: In the United States, because I’m just using my numbers from the United States, because this is where I’m based

00:25:41.730 –> 00:25:57.450
Jason Mefford: There are approximately 32 million businesses or companies in the United States 32 million out of about 320 million people. Right. So that’s 10 businesses or sorry one business for every 10 people

00:25:58.230 –> 00:26:12.570
Jason Mefford: In the United States now 32 million organizations in the United States do not have internal audit departments. Okay. So if we start looking at those 32 million

00:26:13.290 –> 00:26:24.270
Jason Mefford: And we look down and we find that actually less than 2000 companies out of those 32 million have 1000 employees or more

00:26:24.990 –> 00:26:37.860
Jason Mefford: And most likely, unless your company has more than 1000 employees, you’re probably not going to have an internal audit department anyway, right. So we go from 32 million down to less than 20,000 businesses.

00:26:38.670 –> 00:26:50.310
Jason Mefford: Now if we look at the number of publicly traded companies in the United States. So in the United States, there is a requirement NASDAQ and the New York Stock Exchange both

00:26:50.850 –> 00:27:01.020
Jason Mefford: After Sarbanes Oxley came out with requirements that said if you are a publicly traded company and you are going to be traded on our exchange.

00:27:01.470 –> 00:27:14.280
Jason Mefford: You must have an internal audit department. Okay. So that became a compliance requirement for publicly traded companies. So all publicly traded companies need to have

00:27:14.700 –> 00:27:32.790
Jason Mefford: An internal audit person at least there’s only 3700 publicly traded companies in the United States. Okay, so what we see there is that 99.9% of the companies in the United States do not have internal audit.

00:27:33.870 –> 00:27:43.620
Jason Mefford: Now why am I saying this. Well, just to, again, our belief is every company needs internal audit.

00:27:44.190 –> 00:27:54.990
Jason Mefford: That is not a true belief. The reality is most organizations don’t need internal audit now is internal audit important hell yeah.

00:27:55.410 –> 00:28:07.380
Jason Mefford: And if you have multiple stakeholders. If you’re publicly traded if even if you’re privately traded, but you have, you know, different stakeholders that you’re responsible for we need internal audit.

00:28:07.770 –> 00:28:16.320
Jason Mefford: Okay, we need internal audit, but we don’t need the traditional historical low level groups that we have been doing

00:28:16.800 –> 00:28:25.860
Jason Mefford: And again, the reason for part of that too is in the last 20 years there have been lots of other compliance groups that have been developed.

00:28:26.190 –> 00:28:36.420
Jason Mefford: And staffed and budgeted in organizations compliance departments risk management departments privacy groups, other things like that that in the past.

00:28:36.780 –> 00:28:45.660
Jason Mefford: Internal Audit may have done that work, but we’re no longer doing that work because there have been these other groups that have been

00:28:46.650 –> 00:28:57.270
Jason Mefford: Set up. OK. So again, to go back in and tell the executives that you need internal audit and we are relevant and you have to invite us to the table.

00:28:57.750 –> 00:29:06.630
Jason Mefford: Is really a silly childish argument, and most of the executives that I know are going to cry bullshit on you if you try to use that. Okay.

00:29:06.900 –> 00:29:18.180
Jason Mefford: Because I would cry. I, I would call bullshit on you too. Okay. My companies don’t have internal auditors. We don’t need them right because of the because of the organizational structure that we are so

00:29:19.440 –> 00:29:29.970
Jason Mefford: How do we get that relevance. How do we provide value to our organizations, because again, one of the things that I have been concerned with is now again.

00:29:30.330 –> 00:29:35.250
Jason Mefford: You know, shiny objects and bright lights. People are starting to use these other terms.

00:29:35.820 –> 00:29:41.730
Jason Mefford: So some terms that I’ve heard recently value based auditing. I have no idea what the hell that actually means. Okay.

00:29:42.360 –> 00:29:48.900
Jason Mefford: Objective based auditing. I kind of know more what that means, but we already have something that’s supposed to be based on objectives.

00:29:49.470 –> 00:29:56.520
Jason Mefford: How about er em auditing. Well, again, that to me is your only auditing risk management, the risk man enterprise risk management function.

00:29:57.180 –> 00:30:07.680
Jason Mefford: And now I’m starting to hear people talk about traditional risk based auditing and that we need to have value based auditing instead of traditional risk based auditing.

00:30:08.340 –> 00:30:18.660
Jason Mefford: Well, the fact that people put the word traditional at the front of it means that, and again, in my experience, when I talk to people that that think they’re doing risk based auditing.

00:30:19.740 –> 00:30:32.340
Jason Mefford: If I asked them a couple of questions. I find out that about 90% of the people who think they’re doing risk based auditing are not actually doing risk based auditing.

00:30:32.790 –> 00:30:42.780
Jason Mefford: they misunderstand the concept that came around, you know, 2530 years ago and the fact phi I continue to use the term risk based internal auditing.

00:30:43.110 –> 00:30:55.260
Jason Mefford: Even though other people are using these is because risk based internal auditing is about auditing those things that are relevant to the strategic objectives of your organization.

00:30:55.740 –> 00:31:07.440
Jason Mefford: Which means every project you’re doing, you should be able to align that with a key strategic objective and risk at the strategic level in your organization.

00:31:07.770 –> 00:31:15.180
Jason Mefford: If you can’t do that for most of the projects that you’re working on, you’re not really doing risk based internal audit.

00:31:15.480 –> 00:31:26.640
Jason Mefford: And and I’ve got another episode on that on the podcast, you can go back and scroll and watch that I’ve got several different courses out on see risk Academy as well. They get into this in more depth.

00:31:27.300 –> 00:31:37.830
Jason Mefford: But folks, we don’t need to create a new name, which is usually the same old crap that we’ve been doing before. It’s the same old stuff with a different name.

00:31:38.850 –> 00:31:49.170
Jason Mefford: We need to be more forward focus. We need to be actually working on those things that our company really needs help with

00:31:49.650 –> 00:32:05.550
Jason Mefford: So, you know, how do we actually do that. Let me give you a few takeaways. Because again, as I told you I want to help you to start integrating and doing some of these things start applying these insights that you’re hearing from this podcast.

00:32:06.750 –> 00:32:15.840
Jason Mefford: I don’t want you to become that CAE who just got fired because the executives and board think that your to traditional in your nature.

00:32:16.230 –> 00:32:24.150
Jason Mefford: I want you to be out there rocking internal audit being more progressive being more risk based in what you’re doing.

00:32:24.630 –> 00:32:39.870
Jason Mefford: And actually aligning what you’re doing to what the organization needs not what you think it needs. But what the organization actually needs. That’s where you’re going to show your relevance.

00:32:40.290 –> 00:33:00.210
Jason Mefford: You don’t become relevant by telling people you’re relevant you become relevant by actually showing people that you are relevant. Now, how do you do that. Here’s a couple of takeaways for you to consider and start thinking about this next week, how you can start doing things different.

00:33:01.230 –> 00:33:09.360
Jason Mefford: The first one, how you, how you become relevant help management solve their problems. Okay.

00:33:09.750 –> 00:33:16.440
Jason Mefford: Now again, some of you may say, Well, I can’t have management telling me what I need to do because I need to be independent and objective.

00:33:16.860 –> 00:33:27.300
Jason Mefford: And I would say hogwash to that. Okay, we have spent too much time in our profession being idealistic about independence and objectivity.

00:33:27.840 –> 00:33:41.160
Jason Mefford: And that is making a huge wall between us and our organizations. Now, those things are important. If your management is out of control. But I will tell you that is less than 5% of the organizations.

00:33:41.520 –> 00:33:49.290
Jason Mefford: So if everybody is is acting the way you should, if you’re management’s out of control in the 5% we got a big problem, folks. Okay.

00:33:49.800 –> 00:34:01.800
Jason Mefford: So solve management’s problems. How do you do that you actually ask them. Okay. You ask them what they need help with. So the second one.

00:34:02.280 –> 00:34:07.200
Jason Mefford: Is especially at this time going through the pandemic and a lot of the things that we’re going through

00:34:07.770 –> 00:34:20.910
Jason Mefford: We should be doing less assurance work, we should be doing more consulting and more advisory work. Why, because your organizations need help at this time.

00:34:21.660 –> 00:34:28.350
Jason Mefford: You know, I’ve shared the analogy before, but if we’re on a ship and the ship is sinking.

00:34:28.800 –> 00:34:37.350
Jason Mefford: You don’t go to the captain and say, well, Captain. We have these 15 artists that we need to perform and the captain is going to look at you like,

00:34:38.010 –> 00:34:44.370
Jason Mefford: The ship is going down, folks. Why don’t you help me actually save the ship. We can talk about this other stuff later.

00:34:44.730 –> 00:35:05.580
Jason Mefford: Help me save the ship. So that’s what I’m asking you to do as well help save the ship that you’re on the company that you’re on. Find out what problems need to be solved and see how you can actually help those do more consulting and advisory work, especially at this point in time.

00:35:06.750 –> 00:35:19.290
Jason Mefford: The last thing for you to consider as well, is you all. We all okay we all need to understand risk and risk based internal auditing better

00:35:19.770 –> 00:35:27.180
Jason Mefford: As I told you before, probably about 90% of the people that I encounter do not actually understand risk.

00:35:27.540 –> 00:35:39.060
Jason Mefford: And they do not understand how risk based internal auditing that little thing that even is referred to in the standards and the mission of of the of internal auditing for my day.

00:35:39.600 –> 00:35:51.300
Jason Mefford: They don’t understand what that really means and folks risk ranking a list of processes is not risk based internal auditing.

00:35:51.810 –> 00:36:00.390
Jason Mefford: It’s just risk ranking something that has nothing to do with the strategic objectives of the organization. Okay.

00:36:00.690 –> 00:36:08.280
Jason Mefford: So those are your things to kind of think about this week, go back, figure out what is it that we can do to actually solve management’s problems.

00:36:08.760 –> 00:36:21.450
Jason Mefford: How can we transition more to doing more consulting and advisory work, especially in this in this next year to while all of your organizations are trying to grapple with this pandemic that we’re in.

00:36:22.500 –> 00:36:32.370
Jason Mefford: That’s going to help you develop the relationships. It’s also going to help you show that you’re relevant because you’re going to be helping to solve management’s problems.

00:36:32.820 –> 00:36:41.970
Jason Mefford: And then, again, get a deeper understanding of risk management what it actually is. It appalls me and it is embarrassing.

00:36:42.390 –> 00:37:01.590
Jason Mefford: How many people in our profession, even in even in the risk management profession that claim to be risk experts, but they just miss understand some very, very basic concepts related to risk management and if you don’t understand some of those basic concepts.

00:37:03.150 –> 00:37:19.020
Jason Mefford: Everything else is hard for you to get the other problem. You look like an idiot to somebody who actually understands it. Now, that doesn’t help your relevance at all either, right, because if you start talking. Let me give you an example. I interviewed this man one time for a job.

00:37:20.400 –> 00:37:38.280
Jason Mefford: And on paper on his resume. He had all of the right buzzwords on his resume. And so we looked at it, his. He didn’t have necessarily all the experience that we were looking for. But his resume looked pretty good and it was a junior position that we were hiring for

00:37:39.510 –> 00:37:49.620
Jason Mefford: And so we brought him into the interview and it was a panel interview. It was me and the HR representative that was was working with our group. She was assigned to our group.

00:37:51.030 –> 00:38:08.160
Jason Mefford: And so we started we started talking to him. We started asking questions and you know some of the get to know you things at the beginning and we were about five minutes into it and I started asking him some questions, some basic questions that from his

00:38:09.480 –> 00:38:15.450
Jason Mefford: Resume he should have clearly knowing. So we started talking about Kosovo.

00:38:16.980 –> 00:38:20.010
Jason Mefford: He didn’t know what Kosovo actually stood for.

00:38:21.630 –> 00:38:35.910
Jason Mefford: We started talking about, okay, I can’t even remember this was like 15 or 20 years ago now, we started talking about some other things, and I just started asking him a few questions about some of these words that he had put on his resume.

00:38:37.380 –> 00:38:45.930
Jason Mefford: And it didn’t take more than two or three minutes for me to realize this guy had no fucking clue what he was talking about.

00:38:46.500 –> 00:38:53.190
Jason Mefford: Okay, excuse the French but I marked he on this for a reason, right, but he had no fucking clue what he was talking about.

00:38:54.060 –> 00:38:58.650
Jason Mefford: Now I see the same thing sometimes when we’re talking to other people.

00:38:59.190 –> 00:39:10.560
Jason Mefford: We use words we say certain things and the other people just look at us with a blank stare and they’re saying, thinking that same thing. You have no fucking clue what you’re talking about.

00:39:10.890 –> 00:39:16.320
Jason Mefford: Okay, so get a clue, folks. Okay, this is why I’m talking to you. This is why I’m shaking you up a little bit.

00:39:16.740 –> 00:39:23.460
Jason Mefford: I love ya, but sometimes I’m going to shake you up a little bit because I don’t want you to be in these situations.

00:39:24.000 –> 00:39:35.670
Jason Mefford: Where you walk away from a meeting and you are just totally deflated. Okay, I’ve been there. It sucks to walk away and just realize that you probably just blew

00:39:36.000 –> 00:39:48.120
Jason Mefford: Any credibility that you just had with this person, because you said some things that were just off and they knew it, and they could see it, they could feel it right. And so again, understand risk management better

00:39:50.310 –> 00:40:02.730
Jason Mefford: You know, again, I’ve got courses out there. I’ve got other podcasts about this as well learn about risk based internal auditing what it really is, how it really ties back to the strategic objectives of your organization.

00:40:03.330 –> 00:40:11.130
Jason Mefford: If you start at that top that is going to be much more aligned with what your executive management needs.

00:40:11.790 –> 00:40:17.850
Jason Mefford: It’s going to help them solve those problems that they have at the strategic level because ultimately at the end of the day.

00:40:18.180 –> 00:40:26.790
Jason Mefford: You know, if I’m an executive and I get a report from internal audit. This says you know we audited, blah, blah, blah, blah, blah, blah, blah, blah, blah. Right. And we found that

00:40:27.120 –> 00:40:33.450
Jason Mefford: These five controls were not working and all my gosh, you know, we need to we need to fix this. We need to

00:40:33.990 –> 00:40:45.060
Jason Mefford: To spend another hundred thousand dollars to improve the control structure because you know because of these control issues you know we we we lost $200,000

00:40:45.780 –> 00:40:54.000
Jason Mefford: Okay, now again those seem like big numbers. But if I’m an executive and you bring them to me in the back of my mind, I’m going to be saying

00:40:54.510 –> 00:41:03.990
Jason Mefford: I don’t really care about that. I’ve got a 20,000,050 million hundred million dollar problem or risk that I’m dealing with

00:41:04.500 –> 00:41:23.160
Jason Mefford: I’d much more rather have help on that then you tell me that I got to create more controls spend more money on something that has way less of an impact. Alright, I’m going to wrap up for today. But, my friends. Again, I know I kind of shook you around a little bit today.

00:41:24.930 –> 00:41:32.490
Jason Mefford: And I told you I was going to do that sometimes when I when I see things that worry me. I want to share those with you.

00:41:33.150 –> 00:41:40.440
Jason Mefford: Because I don’t want you to get blindsided I want your life and career to be amazing. Okay.

00:41:40.920 –> 00:41:48.480
Jason Mefford: But in order for it to be amazing. You’re going to have to do some things you’re going to have to invest in yourself, you’re going to have to quit.

00:41:48.900 –> 00:41:56.370
Jason Mefford: believing the lies and the false stories that many people in our profession are telling you

00:41:56.970 –> 00:42:04.410
Jason Mefford: And so again, with lots of love, shaking you up a little bit shaky up. Now I’m going to reach through the microphone and give you a big hug.

00:42:05.220 –> 00:42:14.610
Jason Mefford: Because I do love you. I love this profession. I love what we do. I know that we do provide a very valuable service.

00:42:15.120 –> 00:42:25.470
Jason Mefford: To our organizations, when we’re actually focused on the things that matter. And that’s what my hope is, is that just start focusing on the things that really matter.

00:42:26.250 –> 00:42:32.400
Jason Mefford: You know you’re helping management solve their problems, you’re, you’re helping more in the consulting and advisory work.

00:42:32.760 –> 00:42:43.740
Jason Mefford: And that your understanding risk and really what risk based internal auditing is so that you’re moving from that traditional internal audit, which is dying.

00:42:44.190 –> 00:43:01.740
Jason Mefford: Into a more progressive and risk based truly risk based internal audit methodology. So with that, my friends. Continue rocking it in the audit world and I will catch you on a future episode of jammin with Jason. Have a great rest of your week

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