Why internal auditors are ‘the good guys’

13 Jun 2019

by Larry C. Herzog Butler

Hi, I’m Larry C. Herzog Butler and I’m Senior Director, Internal Audit at Delivery Hero. In 2017, I introduced and established the internal audit function at the company, and today we have a team of seven amazing internal auditors. Read on to find out everything you always wanted to know about internal audit!

“Take the example of a house”

Explaining what internal audit does is probably the most difficult thing that we do. Nevertheless, in the simplest of terms, we protect organizational value.

Take the example of a house. A house is a valuable asset itself and contains valuable assets (e.g. electronics, jewelry, cash, etc.) that require protection. The owner of the house is responsible for protecting these assets, and so they close and lock the doors and windows every day prior to going to work. They may even go one step further to protect their assets by installing an alarm.

How do we know if the locks and alarm are effective? If nothing is stolen, the owner assumes that all is ok. But did they lock the doors and windows and turn on the alarm every day? Well, internal auditors are the good guys who come by periodically to check to see that the doors and windows are locked and that the alarm is turned on.

Our internal audit team audits our systems and processes to ensure that our company’s assets (e.g. people, operations, systems, data, and cash) are protected and that we are prepared for the fast growth expected by management and investors.

Continuous fast growth

The German Corporate Governance Code (“Deutscher Corporate Governance Kodex”) requires that listed companies establish an audit committee responsible for monitoring the internal audit system. However, non-listed companies may also have internal audit functions (even when it is not required to do so) because internal auditors are independent and objective.

At Delivery Hero, management and the Supervisory Board align on strategy, and management is responsible for executing this strategy. Our audits are aligned with this strategy, in as far as we focus our audits on areas that are critical to our continuous fast growth. This provides all stakeholders – investors, the Supervisory Board, executives, management, employees, the public, customers, restaurants – trust that our company has the right processes and systems in place to achieve its strategic objectives.

internal audit team

Internal audit at Delivery Hero was introduced in January 2017, in preparation for the company’s IPO. At that time, there was only one auditor – me (smile). Today, we are a team of seven responsible for providing assurance aligned with our company’s continuing fast growth. This is quite impressive for a company that is only two years from its IPO. Our team’s mission is to protect and enhance organizational value via independent and objective assurance, consulting and insight. Nevertheless, we also aim to make internal audit fun. We’ve created a slogan that we use to inspire us to always aim higher: “We are Heroes, it’s time to fly!”

The power of a great story

Our team is made up of internal auditors from around the world. I would describe our team as diverse, passionate and creative. We have a 2 to 1 ratio of women to men; we have team members from Kazakhstan, France, Portugal, Austria, Finland, Canada, and the USA. The thing that I love most about our internal audit Heroes is their humility. Often auditors have a reputation similar to that of police or a tattle-tale: that they only point out what management has done wrong. Our Heroes are the good guys and approach auditing with humility and seek to first build relationships with management in order to improve systems and processes by not only pointing out areas for improvement but also what is working well.

My grandmother (“Grandma Shirley”) was a professional storyteller, and I think that all of us (despite one’s profession) should leverage the critical aspects of storytelling. I challenge our team members to build relationships throughout our organization via stories to better convey our message of continuous improvement. The team has accepted this challenge and for every audit observation develops the 5Cs: Condition (what is the problem?), Criteria (what standard was not met?), Cause (why did the problem occur?), Consequence (how will the problem impact the organization’s strategic goals?), Correction Action (what should management do to fix the problem?). Documenting the 5Cs facilitates storytelling and discussion with management on how to fix the problems.

Each team member will relate to being asked to “tell me a story” during their interview. I did this (and continue to do so) because everyone can relate to a story; very few are interested in or can relate to the status quo.
“We performed a test of 25 samples. 23 passed and 2 failed. We deem this control ineffective.” While every internal auditor is familiar with this terminology, it has a tendency to put management to sleep. It’s much more effective to say: “In 2018, one of our competitors lost over €1M because access to their banking system is not properly controlled. We must fix our access controls immediately, as our sales and marketing department can use these funds to help grow our business.”

Future vision

The most rewarding part of our job is receiving recognition from management for the value added by internal audit and our recommendations. Internal audit usually isn’t management’s favorite topic, so when management says that our team’s audits are the best that they have ever experienced and welcomes us back anytime, it means that we are doing something right in dispelling the negative stereotypes associated with auditors.

Larry Butler

Larry C. Herzog Butler

Another rewarding aspect is the opportunity to travel and experience different cultures. In the past year, our team has spent time in Korea, Uruguay, Turkey, Serbia, Hungary, Bulgaria, Thailand, Italy, Romania, the Netherlands, Singapore, Greece, Croatia, and Malaysia. Working, eating, and building relationships with our colleagues around the world is very rewarding.

Internal Audit at Delivery Hero is special in that we are a team of seven and responsible for providing assurance for a company that operates 100+ subsidiaries in 40+ countries. This means that we must do more with less. We take this as a challenge. And we are currently leveraging technology to help us to do our audits more efficiently and effectively in all phases of the audit process. Our vision is to continue using cutting-edge technology to digitize the internal audit function such that we are able to audit towards current risks at the speed of business.