Podcast: The IIA FS Exchange Conference, Day One Recap

The Protiviti View,

Protiviti is a sponsor and speaker at The IIA’s Financial Services Exchange conference in Washington, DC this week. We are speaking with attendees at the conference on some of the topics and ideas being discussed there. Listen to our conversation with Kevin Leicht, Managing Director with Protiviti’s Internal Audit practice, for a rundown of day one.

Podcast – Kevin Leicht, FS Exchange, September 16, 2019
[Transcript]

Kevin Donahue: Hi. This is Kevin Donahue, Senior Director with Protiviti’s Marketing Group, here to welcome you to a new installment of Powerful Insights. I am pleased to be talking today with Kevin Leicht. Kevin is a Managing Director with Protiviti’s Internal Audit Group who focuses on the financial services industry. Kevin is also attending this week the Financial Services Exchange conference put on by The IIA in Washington, D.C., and I wanted to talk to Kevin just a bit about what he’s hearing at the conference this week. Kevin, thanks for joining me.

Kevin Leicht: Absolutely, Kevin. We got Kevin and Kevin today.

Kevin Donahue: Oh, I know, can’t go wrong with that! Kevin, as I just mentioned in my intro, I know you’re at the conference. I know it’s a very exciting time in the financial services industry, a lot of changes going on, and this has certainly an impact on the audit side as well as anything else. With that backdrop, why don’t you tell me a little bit about some of the things you’re hearing at the conference this week or what you heard today, what are some of the things on people’s minds, things that you’re talking to folks about?

Kevin Leicht: Yes, absolutely. It is an interesting time because there is such a focus on the concepts of next generation and what’s coming next and how is our industry going to change and evolve, and so there have been a lot of discussion to that end, but something else that’s interesting that I’m hearing is we as auditors need to remember to come back to the basics.

Maryann Kennedy kicked off the day today by talking about the fact that one of the things that she looks for as the Senior Deputy Comptroller of Large Bank Supervision is something as basic as what’s the organization doing with three lines of defense. Do we have a clear and distinct separation? Are the control functions, risk management functions, and internal audit able to operate independently and provide that effective challenge? It’s not a new concept but sometimes, something that’s perceived as being as basic as the three lines of defense, was an interesting reminder for me that really at the end of the day, some of these new concepts might take up a lot of time in terms of things that people are thinking about but at the end of the day, as auditors, we need to make sure that we’re covering on our core mandates, which is providing assurance over risk management. That was one interesting topic that I’ve seen emerge.

Kevin Donahue: Kevin, that’s really interesting. I guess one thought that comes to my mind is this. To your point on making sure to focus on the basics, as the industry is changing, looking at it become more agile, slowly and surely embracing fintechs and entering those markets, do you think it’s becoming more possible or easier for those lines to become blurred or maybe less defined because organizations are moving so quickly?

Kevin Leicht: Yes. Well, I think that one of the interesting things is that although our core mandate might not be changing, the methods by which we achieve coverage as auditors and provide that assurance might need to adapt and change with the times as well. We’ll never be able to relinquish our core responsibility to provide assurance to the organization, but there are things that we should be doing to make sure that we’re not getting left behind and that we’re staying relevant.

Something else that we’re talking about a lot and that I’m hearing is the concept of the war for talent. How do we make sure that we are supplementing within internal audit departments traditional skillsets with skillsets of tomorrow, so PhDs in model management, people who have made careers on analyzing data? Even though they might not be within the traditional path, more and more we’re hearing that we need to be able to acquire the talent that can counterpunch with the first lines because they’re investing in these talents. We think that internal audit does need to make those investments as well.

Another concept we’re hearing a lot about is the power of diversity. So Frank Bramble, who sits on the board of Bank of America was interviewed by Christine Katziff who is the Chief Auditor, and so Frank has been around for many, many decades and had a lot of insights. He characterized the financial crisis as just the most standalone event he has ever witnessed from the front lines, and I was really struck by the fact that he talked about diversity as really being probably the most important thing that the industry needs to focus on. He mentioned this phrase, “We need to make sure that our organization is representing the world that we are a part of.” I think that concept is something that we as Protiviti believe in as well, things like gender diversity, racial diversity, and LGBTQ diversity, but something else that we’re hearing about is the idea of diversity of experience and that it can be a huge tool and asset when we think about ways that we can be innovative and to have creative solutions to how we can stay relevant. No traditional mindset might say that if you have an audit department where everyone has 20+ years experience, then you must be among the strongest, but what we’ve heard is that many people have found that hiring auditors with less experience or maybe even non-traditional training, so maybe someone with an econ degree, maybe it’s someone with a communications degree, that can be a really powerful asset in terms of diversity of experience, and that those individuals might be more inclined to propose solutions that might not occur to someone who is a veteran of the audit world and has been operating within the confines of what it meant to be an auditor for the last 20-25 years. That was a concept that I thought was pretty interesting as well.

Just a good reminder that we need to be open to creative solutions and that one of those paths is exploring what our talent base is and making sure that we have diversity of experience as a consideration as well.

Kevin Donahue: That’s fascinating and what a great rundown, Kevin. One of the things that’s interesting that we, Protiviti, have written about and spoken about in other areas of our practice is the fact that companies that implement these diversity practices within their organizations from management on down perform better. Their shareholder returns and profitability numbers end up being stronger because they’re bringing that diversity of thought to the table, as you mentioned.

Kevin Leicht: Absolutely. When I was a finance major in college, you hear about a well-diversified portfolio and that you’re less likely to have blind spots and gaps in your coverage. I think that same concept really applies, right? You want to make sure that you have different perspectives represented because there’s more of a chance that you will exhaust all possibilities and have different viewpoints represented.

Kevin Donahue: Well, Kevin, this has been a great discussion. Thanks for joining me.

I want to refer our audience to some other content that we have that goes to some of the points you’ve raised. When it comes to talent and skillsets, we talk about a lot of these concepts in our next-generation internal auditing approach. You can learn more about that at protiviti.com/auditnextgen. In addition, we cover this topic quite a bit in our upcoming IT Audit Benchmarking Survey, the results of which will be released in late September. You’ll be able to see those findings and the different expert commentary we have on that, including the skillsets and needed talent at protiviti.com/itauditsurvey.

Finally, for those in our audience who enjoy podcasts, we encourage you to subscribe to our Powerful Insights podcast feed on iTunes or wherever you find your podcast content.

[End of Transcript]

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