Setting up internal audit: case study

Les Krepa, former Head of Internal Audit shares his experience of common learnings from setting up three very different internal audit functions.

“There’s never a complete blank sheet of paper. The audit committee with say the FD or CEO has already started to scope out what internal audit should look like in their opinion. These things tend to come out during the interview process so even before you join you get a sense of their expectations. Though there’s nothing to stop you changing that. You’re being brought it because of what you know after all.”

Every organisation is different. Having set up three IA functions, Krepa has also seen changing priorities. In the 90’s at Morland brewery with Turnbull high profile, the remit focused on risk with IA added later. Then joining global retailer Signet Jewellers Ltd it was about repurposing a store audit team into IA and risk. And then in 2016 the National Grid separated out its infrastructure forming a new company, Cadent Gas Ltd, which required its own IA.

“In all three cases the job description prepared for recruitment felt like a mini internal audit charter. The other thing that nearly always happens is that there’s a budget allocated. There’s always a starting point. It’s really a question of building from that and deciding how to spend it.”

The interview process is the start point of the relationship and the challenges that lie ahead, Krepa’ advice is “to use the process to test if your vision of internal audit is roughly in line with their vision. If you’re hearing bad things, I suggest you don’t even take the job”.

“I’ve learned over time get to appreciate the key stakeholders, the business and its risks before you really start making many decisions about the type of audit function…