The Institute of Internal Auditors presents all things internal audit for the last episode of the year. We wanted to close out 2024 with a true pioneer in the field. Joining me is Professor Jeffrey Ridley, a legend in internal audit whose journey spans an incredible seven decades. Professor Ridley was among the first earn in the CIA designation, which celebrates its 50th anniversary this year.
So join me in Professor Ridley as he reflects on his incredible career shares, insights on the challenges ahead for the profession, and offers humbling advice for the next generation of internal auditors. Can you share your journey in internal audit and what you're doing now? Well, my real interest in internal auditing, I think, came outta my teenage years. I was very active in the Worldwide Scout movement. Uh, and, and from that, I, I learned all about honor and law.
And then I spent four years in the military and learned all about regulation and discipline. And I think honor and law and regulation and discipline are very much a part of the foundation of good corporate governance. And when you look at the principles of corporate governance, you, you see all of those. And I think that really started my interest in development into auditing and then from auditing into internal auditing.
And, uh, I teach at the moment at a university in Lincoln in England on corporate governance. Uh, I've not always been in academia. I spent 30 years in internal auditing before actually that I was in external auditing in what we have in England as a colonial audit service working in Africa. So I've been really in auditing all my life. In actual fact, I've now reached 76 years of working.
I started in internal auditing in 1963, uh, in General Motors, in a subsidiary of General Motors Manufacturing in the uk. And, uh, I spent some years there before joining Eastman Kodak. And for the next 30 years, I worked with Eastman Kodak and became their audit manager and a senior manager in the company reporting to the board. So I pioneered reporting to the board long before, was seen as being the most appropriate reporting line for the internal audit, uh, service in an organization.
So when did you join the IIAI joined the institute in 1966. So I've been a member of the institute for a very long time. I've been a volunteer at chapter level, at European Con Conservation of Institutes level, and at the institute level in the States on, on many occasions, sitting on committees, uh, uh, the Board of Regions, the research committee, the quality in insurance committee, and I've actually carried out research for the Research Foundation.
And what were some of the challenges you faced early on in your career? The main challenge at the very beginning was to accept, get organizations to accept the status of internal auditing at board level. That that was the challenge that every internal auditor had. It has developed a lot since the early years of internal auditing, but in fact, that was not the focus, uh, of internal auditing. It was a service to the organization.
Uh, and really when I was working for Eastman Kodak and Kodak Limited, I saw the organization as four different levels. I sold as a board level, an executive level, an operations level, and a stakeholder level. And each one of those levels needed internal auditing, independent and objective internal auditing to provide a service to add value to what their purpose was and what their objectives were and how they were achieving their strategies.
So it was a different level to systems and accounting. That's what appealed to me. The challenge, the biggest challenge I had was, of course, the introduction of computers and, and how computer technology was taking over, not just accounting and administration, but manufacturing and getting into that black box and understanding it and what was happening and using it, most importantly, harnessing it.
And the auditing was, was what we really had the challenge to do because we were not trained computer specialists. And so I developed teams in Kodak of my audit staff and systems analysts working together as systems were being developed so we could implant audit checks within the systems and get feedback direct on the operations of the computer and how, and how it was, uh, helping management to achieve their objectives.
Very, um, challenging because we were not trained technologists and specialists in, in technology. And in fact, it, it's a challenge today. Uh, but of course it's much easier now because experience and the understanding and the education is, has changed people a lot more to accept technology.
The big challenge today, of course, is ai, artificial intelligence and understanding that and how not only can we audit it, but how can we use it in our, in our planning and in our, uh, risk assessment and our, uh, evaluation of governance. And that's going to be the challenge for all internal auditors, uh, in the future. The other thing, of course, is the big challenge now is addressing sustainability.
The, uh, I, I'm very pleased that the institute is now and has been for some years promoting the, uh, addressing, uh, sustainable practice and reporting, and its current white paper, and it's new, the new IPP f uh, which would be launched next year and address next year is, is addressing all these things concerning sustainability. Speaking of which, what are your thoughts on the state of sustainability and ESG auditing today?
Internal auditors have a, a very valuable contribution to make to the progress on sustainable development goals. And many of the internal auditors working in charities, uh, which I mentioned earlier, have a very good opportunity to promote the achievement of the sustainable development goals in the purpose of their organizations, addressing the social issues of the day.
There were five ps which preamble the sustainable development goals, and each one of them could be addressed in every internal audit activity, people, planets, prosperity, peace, and partnership. If you could just remember those five Ps in your every internal audit engagement you have, you would be a successful internal auditor. You've seen the internal audit profession change with the new global standards and frameworks. What have been the biggest changes and why?
The biggest change in the development of the institute was the 1968 code of ethics, which is now part of the new I, and it's been part of the IPPF since the IPF was developed. It's one of our strongest, uh, strengths we have. We have a global code of ethics. The standards, when they first came out, uh, were very good indeed. But today, the new IPPF is excellent. It, it addresses all that I've been talking about at the moment.
One of the most important changes they made to the IPPF governance is the base upon which all good risk management and control are built. And so we have to be experts in good governance, and we have to understand and know all the corporate governance principles that the best corporate governance principles today are. Those published by the OECD in 2023, originally published in 1999. Those corporate governance principles should be the, for every internal audit.
And the other changes have been made are we now talk much more about the internal auditing purpose in the new IPPF. And that's very important. We have to have a purpose, not just a definition, but a purpose. And, and to some extent that came in 1941 when the institute was first developed.
And if you go back to the first statements of responsibilities for internal auditing in 1941, you'd see a purpose there, which is almost as relevant today as it was then, but you can interpret it very much differently now. But we need to promote more purpose of internal auditing, and we are doing that now in our new IP PF 2024.
We're also addressing stakeholders more, not just addressing people in the organization, but addressing the stakeholders of the organization in its widest sense, which brings in public interest into the, uh, every audit. When one is carrying out an audit, the one I've mentioned most is collaboration. I believe that every internal audit activity, there should be a collaboration with other professions. We are not experts in every topic and subject and operation.
And, and in my internal auditing career, I always worked with, uh, the, uh, other management wherever I was and collaborated with them in the audit, maintaining my objectivity and independence, but still bringing in their knowledge and experience and encouraging them to be part of the audit. I think that's very important. Uh, and it's a balance between independence and objectivity, but you've gotta bring in all the experts into your audit if you're going to get the right added value from it.
From what you've seen, what impact has the profession had on business in other sectors? When I first joined the institute in 1966, it was mainly in local government and the private sector. There was some internal auditing going on in central government, but it wasn't in any way linked in to the Institute of Internal Auditors.
In fact, I set up in the UK the first GPAC committee, the Government and Public Affairs Committee, uh, and we, we started to promote the institute within the public sector, and it's now very active within the public sector, very strong and linked into the institute. But, uh, that was not my, uh, work. It was a work of a lot of members working in the public sector, public sector, and it's grown very strong, but it's still a very strong links into the Institute of the uk.
We've got networks of internal auditors working in almost every sector in the UK now, uh, and have had for many years. So it, we we're across all sectors, but at the very beginning, it was primarily the private sector and the private sector members who were driving the development of the institute. Of course, professionalism didn't really come into being until after the first standards were published.
One of the areas which gets little publicity is the fact that in 1968, we were probably the very first institute to publish a code of ethics for its members, an international code of ethics, or global code of ethics. Now, in 1968, there were very few, if any, professions with global codes of ethics.
So the move into the world internationally, the global world, which was driven by many of the members at the time, uh, and the development into the Global Institute, uh, is is was one of the excellent strategic decisions that was taken many years ago. And to some extent, I was party of with the people who were driving that to demonstrate how global we were as a, as a profession. And we still are, of course, in with membership and with institutes and affiliations.
Another area, which is we've been very good at as a profession, is in the way in which we've developed partnerships. I think I may be one of the few members who knows anything about treadway. In 1987, when Treadway, uh, report was published, promoting the professionalism of internal auditing, uh, and coso, the commission of sponsoring organizations was formed, and we became a member of coso coso.
Our partnership with ZO has been excellent with many very good publications, frameworks and guidance coming outta Zo, even today with its latest on sustainability and its integrated control framework. So that's that partnership. Another good partnership we've got is with interi, the international, uh, organization and Supreme Audit Institutes, the, all the accounting generals and the world. I think we've been excellent in developing partnerships globally, uh, in, in the institute.
And, and more and more of that is coming out in the new IPF with its promotion of collaboration and the, uh, intent, internal auditing must at, at ground roots level, collaborate more with other professions and with other organizations in the added value that it's providing for the organizations where it's carrying out its service. What's your life been like outside of internal audit, and how does that play into being better at the profession?
Like how has it kept you passionate and kind of been able to separate the two? Well, in my forties, the middle forties, I decided to study something entirely different to auditing. And I, I took up palenology looking at fossils and studying fossils, and that led me into geology.
And, and I, I started reading and, and thinking about geology and the, the science of geology, and, and when I found a sentence in one of the books which said, A geologist is a person who turns over rocks to see what lies underneath, I thought that was too much like auditing. So I decided, no, that sounds just auditing. Then I started looking the next phase of which was geomorphology. And geomorphology is much closer to sustainability. It brings in the shape of the landscape.
When you are looking at the shape of the landscape, you are looking at the world not just at what you see, but what is beyond what you see. And so, uh, geomorphology gave me much more interest. Uh, this was in my forties and fifties, but in my fifties I took up painting as a hobby. And since then I've been creative in painting. And I think that's a very good analogy of what an internal auditor does when they start any engagement.
They look at the landscape and they start making it more attractive in many different ways by their recommendations and their findings. And so when they leave that scene, it's in a, it's better than when they first went. So that, those are, those are my, so painting is still my hobby. I, but I write a lot. I still publish, as I mentioned earlier. I write, I, I publish articles. I publish research. And, and so it's, it's really, I have lots of different hobbies.
I don't practice internal auditing now, but I'm, I'm passionate about it and I'm pleased that so many people are making very exciting careers out of it today. And I was a part of its development in the past. I've published three books. I published my first book in 1998, my second one in 2008, and my third one in 2018. And I'm currently working on the writing of my fourth book, auditing. Sustainability Matters. You're Busy. That's only part of my life.
There are aspects of it, not to do with internal auditing, but I, I am busy and, and I think that's a good thing to be. Absolutely. I enjoy that. So what qualities do you think make for a good internal auditor? I think there are two qualities which, uh, LaMi Sawyer, uh, promoted in his writings, which I think every internal auditor should have. The first one is imagination.
You've got to be able to imagine what you are looking at and what its purpose is and, and how it operates very quickly in an audit. When you start any audit, you are stepping into the unknown. You've probably never been in the organization or the operations at whatever level you are at, and you've got to ask the right questions. You've gotta use your imagination, and you've got to be curious. So Professor Ridley, what advice would you give to the next generation of internal auditors?
I've got five advices to give a thought about these be professional and all that you do and all that that entails. We don't promote our professionalism as much as we should. We talk too much about internal auditing and less about professional internal auditing.
Uh, there are many, too many people working in internal auditing today who are not professional, and, and so I think we should be promoting that more, and I would recommend to all entering internal auditing today to do seek professional qualifications. The second one is have a passion to be best in whatever you are going to do. You must be passionate about what you're doing if you are going to enjoy it. The third one is enjoy what you do.
If you are not enjoying what you're doing, you ought to leave the profession of internal audit. You've got to believe that what you're doing is providing an excellent service to all levels in the organization that you're working in. And if you believe that you'll enjoy what you are doing, you'll be respected and given status. Next one is be proud. Be proud that you are an internal auditor, promoted, marketed.
Tell everyone that you are an internal auditor, not that you're an auditor, that you're an internal auditor. And then the next one is, be a volunteer in your profession. Don't just think of your work as an internal auditor.
Think of how you can promote the profession of internal auditing by volunteering in your chapter or your network, uh, to promote the role of a professional internal auditor and address public interest, particularly how we are going to achieve the United Nations 2030 agenda of sustainable development goals. That's so important today for every internal auditor. And the institute has given tremendous advice on how to do this internal auditing.
Uh, other professionals are addressing it in the same way, giving guidance to their members. If you neglect that guidance, you'll never be the best internal auditor. Looking back, what are the memories you're most fond of? I've had a very good life, a very enjoyable life. I've had a, I I can honestly say I've enjoyed every, everywhere I've worked, I've enjoyed meeting so many people. I've traveled the world, uh, uh, teaching auditing. And, and so I, I've been to the us, I've been to far East.
I've been to the Middle East. I've been to Europe. I I've spoken at many conferences and I've enjoyed every moment of it, and I'm hoping I'm gonna have another six years before I celebrate my hundredth birthday. The final thing I would say to every internal auditor is, do transform the world to be a better place for everyone. Professor Wood, we thank you so much for taking the time outta your day to talk to us.
It's been an honor to hear about your seven decade long career in internal audit and all your advice for people in the profession. Oh, excellent. It's been, it's been a pleasure to talk to you and, uh, and thank you very much. If you like this podcast, please subscribe and rate us. You can subscribe wherever you get your podcasts. You can also catch other episodes on YouTube or@theia.org. That's THE iia.org.