Performance Measurement and Innovation in Internal Auditing Synopsis Discussed are seven different forces that motivate innovation to happen in an organization and internal auditing – Competition; Organizational; Customer Needs; Activities of Others;

Resources; Motivation of Staff; Performance. Questioned is the need for innovation for its own sake or as a response to risks, threats or opportunism. Four different scenarios are considered.

A model of innovation is developed, designed ‘   to stimulate thought and debate   ’.

Contributed by Stan Farmer, Head of Corporate Assurance at English Partnerships, the National Regeneration Agency. He is a CIPFA qualified Accountant, and an Affiliate member of The IIA.

He is currently Chairman of the Smaller Government Bodies, Head of Internal Auditing Forum, and active in the group established to set up an External Quality Assurance Service for Central Government Bodies. Stan completed his MSc in Auditing Management and Consultancy at the University of Central England in 2005, with a dissertation on Performance Measurement in Internal Auditing. As a result of this work Stan was co-opted onto an IIA working group to develop guidance on this subject. Stan and others on that group have now given numerous presentations on this topic, but combining innovation and performance in this presentation provided an opportunity to extend the thinking in this area, and to perhaps provide an opportunity for others to take on further research on the topic.

After Reading the Case Study Consider:

1. How are you responding to the seven forces that can drive innovation in your internal auditing?

2. Do your current internal auditing performance measures ’   only stimulate modest, incremental or transactional innovation’?

3. Do any of your internal auditing performance measures drive ‘revolutionary’ innovation?
4. Do you recognize any of the four scenarios mentioned in the case (revolution, evolution, growth and maintenance) in your internal auditing and are any of these influencing innovation in the services you provide?