Saying So Long To Silos…
For many years, the term “silo” has been passed around in management meetings and discussed at board room tables. The word silo originally referred to storage containers for grain or underground bunkers for missiles. In business it has taken on a rather negative meaning referring to departments / divisions that operate independently and avoid sharing information. It even extends to some system applications, where information cannot be shared because of system limitations.
Often originating from the top of the organization, due to competition between senior managers, the silo mentality can really reflect narrow thinking. And when you are not thinking outside of the box, you can get stuck - in the box. You block the flow of ideas and sharing of knowledge that can propel your business into new heights of success.
This silo approach has left many businesses and professionals incapable of adapting to changes in the global and local marketplace. If there is one thing the past two years have taught us, it is that adaptability and flexibility is crucial to survival. Who could have thought that employees would be permitted to work from home, and the demand for formal office space would start fluctuating? Whoever thought that auditing could be done remotely?
Moving toward integration and collaboration
Apart from new and enabling technologies, the key factor driving professionals to consider remote options is that silos are being replaced by integration and collaboration. There is a bigger picture emerging:
- Governance, risk management and compliance (GRC)
Weaving together three business areas which are critical to an organization’s daily operations can help the entity achieve greater synergy and value. As an Internal Audit professional, it is no longer just about ticking the boxes to see whether the client is adhering to rules. It is about working in synergy with all role-players to add value to the business.
- Independent assurance and oversight
Boards and oversight committees are blending their efforts to enhance a holistic focus on GRC, thereby enabling greater levels of informed decision making. The most important benefit is bringing the aspect of independence to the business – with an outsider’s point of view, a fresh pair of eyes can often help business owners spot risks and opportunities they were not previously aware off. As Internal Audit, we are focussed on providing independent, objective assurance and consulting services, designed to add value and improve your organization’s operations.
- Combined assurance
It’s all about minimising duplication of efforts, through combined assurance: including engaging with process owners and the first line of defence to test controls and take advance action, seeing collaboration between Internal Audit and External Audit functions, avoiding a year-end rush, and rather allowing for continuous monitoring throughout the year. As an Internal Auditor, it is all about building relationships first, and then helping you to build the business.
To achieve your goals, you need to follow a proper process. One of Mark Twain’s quotes come to mind: “Continuous improvement is better than delayed perfection”. A key step in the Internal Audit Methodology we follow is obtaining an understanding of the client’s processes. Internal Auditors will question the process and consider it from different perspectives to help identify the actual and potential risks and related (existing or desired) internal controls required to mitigate against such risks. If we focus on improving the basics of the process first, we can then add the technology. We do this through collaboration with IT professionals who are part of the GrowthSmiths - no silo thinking here!
- Integrated Reporting
Recognising that stakeholders want better information, allowing for better decisions and a better future for all generations, there is a renewed focus on integrated reporting. The announcement by the International Financial Reporting Standards (IFRS) Foundation on 3 November 2021, at COP26 – the United Nations global summit to address climate change is testament to this: The newly formed International Sustainability Standards Board (ISSB) will develop a comprehensive global baseline of high-quality sustainability disclosure standards focussed on meeting investors information needs.
Through Integrated Reporting, businesses can reflect the value that they have created over time, in terms of environmental, social and governance (ESG) aspects. Integrated reporting is not only for large entities – it is scalable to all organizations regardless of size and sector. The integrated report can be an effective way to help SMEs better understand and manage how they create value, and report on that value creation.
ESG Reporting is built on integrated information and thinking - and is here to stay. Internal Audit can help you through providing assurance on your ESG information, act as a sounding board for your ESG endeavours and review the quality of your integrated report. Another step towards eliminating the silo mentality!
So, with all these collaborations and integrations on the global agenda, can you really afford to stick to silo thinking? In my opinion, it’s time to say so long to silos!
This article was written by Ms. Tania Knoetze CA(SA). Find Tania's services here: Internal Audit Services – GrowthSmiths (thegrowthsmiths.com)