Giulio Ockels MSc RO CIA is working for the Audit Department of the Sociale Verzekeringsbank (SVB), and was the winner of this year’s IIA Innovation Award, hosted by the IIA in collaboration with Protiviti. IIA YP committee Chairwoman Marieta Vermulm was one of the jury members.
First off, can you tell us a bit about yourself?
I work in a department of about 23 people covering financial, operational and IT audits. My background is in operational audit and I was also a member of the IIA YP committee for four years. Before going into audit, I did a master in social/behavioural sciences.
You are only 34 now, do you feel like a Young Professional at heart?
Well, I feel like I’m falling out of that category now. This is also why I want to hand over the stick to new ambitious committee members, who in my opinion are really able to give a new burst to the committee and its events.
The Audit Department of the SVB won the award thanks to the development of an innovative new method of root-cause analysis and effectiveness testing called Quantitative Analysis of Causes and Effects. The IIA YP interviewed Giulio about the innovation and how his team developed this new technique.
What inspired you to think of this technique?
For my master study in social sciences I applied this form of analysis a lot. This also counts for other auditors with backgrounds in social sciences. But what you see is that what auditors have learned during their master studies is too often forgotten when they start their careers. So I wanted to apply this technique in my work place as well.
What makes your innovation stand out from other innovations within internal audit?
I think it is the thoroughness, and that you can show things in a really reliable way. So you use statistical analysis to show relationships between causes and effects - between business actions and business results.
Why do you think this idea won the IIA Innovation Awards?
I think it is a combination of two things: First, as an auditor you really want to get a reliable view of how things are. If you look at diagnostic methods, the current techniques are just not thorough enough, the quantitative analysis of causes and effects ís. Second, in our example we demonstrated how this method can be applied to determine the effects of soft controls, which we measured using a survey. I think the jury was quite positive of this.
"As an auditor you really want to get a reliable view of how things are. If you look at diagnostic methods the current techniques are just not thorough enough, the quantitative analysis of causes and effects ís."
If you had to make an elevator pitch for your idea, what would it be?
I’m not really good at elevator pitches; I talk too much for that. But what we did is develop a method to prove there is a relationship between the root causes of problems and the effects of controls effects. If you know there is a problem in the organization, internal auditors usually do qualitative research to determine what the possible root causes are and conclude on their validity. The real validity of these conclusions can be questioned, which is an inherent limitation when doing a qualitative root-cause analysis. With our approach we use statistical analysis to objectively prove the relationship between the cause and the problem. For example, if you want to know with 95% certainty that the root cause is linked to the finding, then you can use our method.
Would you like to have full Intellectual property rights over this idea?
No no, I want everyone to use this idea. These are common statistical techniques in social sciences which are applied to audits. And I think it is a great opportunity for the audit world to start using more statistical techniques, so anyone who has a question about it can contact me.
Would you like your idea to go viral?
Haha, go viral? Yes! It would be good if other audit departments use this method too. Of course this needs to be demanded by the board too. They are one of the customers after all.
Have you used this method in real audits so far?
Yes, we did a survey research on a cultural change program within the SVB. The board invested time and money in this cultural change program, which was designed to change the organizational culture in some aspects. They wanted to know if the investment in the program worked, so we applied this technique to study the impact of the change program on the culture of the SVB. We collected data from people using a survey and compared variances in subcultures. Using SPSS as a statistical tool we could prove that there are significant differences in behaviour between people who were affected by the soft controls and those that were not.
How did the board of directors react to this innovative new method?
The board of directors responded very well to our research into the impact of the cultural change program. They wanted to know if the cultural change program was effective. They really invested in the program to reach certain cultural goals. With this technique we could show them whether their cultural change goals were achieved or not.
Can any audit department use this technique?
You need to have some basic knowledge of statistics and else I’m glad to explain it. In Excel you can do most of the analysis, but SPSS works better.
What do we need, to apply this technique in our own organizations?
That is a good question, because the preconditions are quite important. What you need are cases. You need a lot of cases or incidents to occur and first measure these, before you can apply this technique. Variation between those cases is also needed. For example: you need to collect enough data to be able to use the analysis. At a minimum we try to get at least 20 cases in each group used in an analysis.
Are you and your department always this innovative?
We are quite an innovative department. The department made a great shift between 2012/2014 to become a modern audit department. Our current head of internal audit, Karin Hubert, is really supportive of this. Also our manager of IT and Operational Audit, Peter Hartog, is very supportive of innovative ideas in the work place.
What other innovative ideas have you had?
We are experimenting with Behavioural Auditing Techniques as well, but we did not come up with this ourselves, they are developed by Jan Otten and Inge van der Meulen. This is a qualitative research method looking at social psychological factors within the organization. It is a totally different way of looking at an audit object. Using this technique we created great discussions within the board of directors. Another innovative idea is using surveys and interviews in a mixed way to cover the audit object in a broader way.
What is your next innovative idea? Are you looking into anything new?
Erm, I think we are going to expand this technique to more field experiments. If the organization wants to do an intervention for example, you can do a pre and post intervention measurement to see whether the intervention was effective.
Some people see SVB as a bit of a boring, conservative company – your innovation would suggest otherwise.
I know some people look at the SVB as a boring government company, but I think it is great to work here because it is a very dynamic and interesting organization that really wants to improve herself. All the directors I speak with are driven to make things more efficient and more effective. Maybe it was a conservative company one day, but that is not the SVB I work for. We are the proof of that.
Interviewee: Giulio Ockels MSc RO CIA [email@example.com]
Author: Jack Mills MSc RO [firstname.lastname@example.org]