Every organization faces challenges in responding with sustained improvement to audit findings. Effective organizations use change management and the COSO Business Framework to make change stick.

Executive Summary
Auditors and company leaders are committed to resolving audit findings to produce enduring gains in internal controls and operational efficiency. Yet many initial audit solutions do not last. Best practice organizations implement the systemic improvements necessary to make change endure with time. When change is lasting, the auditor’s job becomes less redundant: with internal controls in place, the organization’s practices are easier to assess and monitor, training of employees is consistent, effective habits are formed, and consequences are spelled out for not adhering to an audit solution.

However, sustained improvement can be difficult to achieve. In a recent McKinsey survey, only one third of organizations interviewed achieved lasting performance improvement based on a cross-organizational change initiative. Most typically, the failure to sustain performance improvement lies in the fact that organizations have functional expertise and best practice knowledge but don’t have change management expertise. This lack of change management understanding lies behind many failures to implement complex change and can overwhelm bright and capable leaders.

The secret to sustained performance improvement in response to audit findings lies in applying a combination of the COSO framework and change management principles. Change management principles focus on implementing complex enterprise-wide organizational change and providing the right controls to ensure those changes last.

Outcomes
Outcomes of this 18-month change effort with a medium size energy company included significant dollars saved, dramatic lowering of risk, and a substantial increase in customer satisfaction. Measureable results included:

• $47 million saved (auditor and board approved saving methodology)
• Board-level budget approval amounts increased from $300K to $2 million, thereby reducing the number of items that had to go before the Board for approval
• Internal customer satisfaction measures improved on average 144 percent
• Audit findings resolved with re-audits scoring 100 percent Audit findings resolved with re-audits scoring 100 percent
• Hired 60 percent new procurement team members
• Supply Management team members response on twenty manager effectiveness measures improved on average 95 percent.

Improvement Factors
What follows is a high level summary of key challenges, benefits and features of the improvement effort.

• Leveraging the auditors authority and perspective to keep improvements on track change-management approach
• Sustaining executive will over 18 months of a large scale change management process
• Managing power struggles and legacy roles and responsibilities
• Connecting multiple, disconnected systems or processes and training team members on re-tooled processes
• Holding to improvement measures when challenged by internal and external forces

• Lessening risk-dramatically
• Saving money during a down economy
• Boosting employee performance and morale
• Driving higher customer satisfaction
• Shortening purchasing cycles
• Reaching employees via cascading employee communication
• Simplifying and clarifying processes
• Increasing automation and reducing paperwork

• COSO Framework bridged business needs with change management needs
• Strong and united executive actions overcame divisiveness
• Got the right people on the bus, right away
• Developed Skill Matrix to describe necessary strategic sourcing skills for current employees and became the basis for competency based hiring of new employees
• Unified disparate processes across five business units

Interested in the complete White Paper?
The purpose of the more detailed report is to assist you in succeeding at large scale change and making audit actions stick. This paper provides auditors and company leaders with proven actionable information regarding “what works” in complex and controversial change efforts. By applying this information we hope you will join the rare 30% of organizations who deliver successful enterprise-wide change efforts (The McKinsey Quarterly conducted the survey in July 2008 a total of 3,199 executives from industries and regions from around the world responded.)

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