1 Planning and Programming for Effective Use of External Audit Resources Victor Rezendes Managing Director Strategic Issues U.S. General Accounting Office

2 Key Questions All Organizations Must Answer to be Effective Who and what are we, what do we do now, and why? What do we want to be and do in the future, and why? How do we get from here to there

3 Benefits of Strategic Planning Increased effectiveness increased efficiency Improved understanding and better learning Better decision making Enhanced organizational capabilities Improved communications and public relations Increased political support Source: Creating and Implement Your Strategic Plan, John M. Bryson and Farnum K. Alston

4 Excuses for Avoiding Strategic Planning Lack of support Planning will not lead to perfection We are too big/or too small We have a union We have policies and goals to take care of this We do not know where to start We did this years ago We are perfect already Source “Creating and Implementing Your Strategic Plan”, John M. Bryson and Franum K. Alston

5 Organizational Transformations Current State process-oriented stovepipes hierarchical inwardly focused micro-managing reactive behavior avoiding technology hoarding knowledge avoiding risk protecting turf High Performing Organizations results-oriented matrixes flatter & more horizontal employee empowerment proactive approaches leveraging technology sharing knowledge managing risk forming partnerships 9 Key Practices leadership Integrated mission & goal clear principles & priorities goals & timeline implementation team line of sight communication strategy employee involvement world class organization

6 Key Elements of the Strategic Planning Process External, Internal Scans Client Stakeholder Input Review Authorities Develop/ Revise: Mission Values Goals Develop/ Revise: Themes Strategic Objective Strategies Internal Review and Agreement Consult Key Stakeholders Develop Agreement Publish Plan

7 Effective Use of Resources Begins with Strategic Planning Start with the client and end with the client Build consensus by involving a variety of internal and external parties Focus on strategic results Set high expectations Think horizontal and longer term but update frequently Publish the plan for transparency reasons Use the plan as a framework for all other key organizational decisions, with appropriate linkages (e.g. performance measurement, rewards, recruiting and training) Be accountable for results through measurement and publication

8 Realign Resources to Focus on the Plan Understand the strategic objectives and align the organization to meet these objectives Encourage matrix management Enhance efficiency, flexibility, and accountability by reducing layers of management and numbers of organizational units Realign as needed Develop workforce plans to support the strategic plan

9 Maximizing Value and Managing Risk Within Resource Constraints Focus management resources on activities with the most value and risk based on Benefits Costs Controversy Complexity Assess and designate risk levels for each engagement High Medium Low Adjust review and other processes to reflect the level of value and risk

10 Ontario Internal Audit Division Risk Model Environmental Risks Strategic Risk Operational Risk Compliance Risk Financial Risks Informational Risks Organizational And Cultural Risk Risk that results from: Systemic issues Culture and values Commitment Learning and management systems Risk that results from: The business that you are in (volatility of external factors) The direction that you plan on going Carrying out your objectives Having to comply with laws, regulations, standards and policies Obtaining, committing and using economic resources Relying on information Source: Jacques R. Lapointe, Chief Internal Auditor & Assistant Deputy Minister, Internal Audit Division, Management Board Secretariat, Toronto, Ontario Scope of Risk Management

11 Institutional Risk Management Establish protocols (policies, procedures, transparency) for dealing with clients and audited organizations Client feedback (e.g. surveys)

12 People Process Technology Environment Key Enablers for Effective Performance Management The most important of the four is PEOPLE — an agency’s human capital.

13 Develop a Skilled Workforce developed an overall workforce plan intensified recruiting efforts in areas requiring specialized skills and expertise implemented succession planning created inventory of staff knowledge and skills enhanced training programs revamped and modernized your performance appraisal system and compensation system and linked it to our Strategic Plan enhanced rewards and incentives to attract and retain high quality staff with specialized skills established office of opportunity and inclusiveness to ensure that all staff are treated fairly and their differences respected employee preference and feedback surveys

14 Conclusion SAI’s work needs to be professional, objective, fact-based, non-partisan, non-ideological, balanced and fair Our work should be focused on building the future, not the past Strategic planning is vital if we are not going to repeat the the same problems Planning and programming helps us assume better utilization of resources Assuring the effective use of external audit resources is an issue that all SAIs face, and we have much to learn from each other through knowledge sharing, benchmarking and best practices information