Michal Wolszczak talks to IA Bulletin about the valuable role internal audit has played in shaping his career and the importance of developing the right leadership skills.
IA Bulletin: When did you decide that you wanted to work in finance?
I grew up in Poland, and I can’t claim I always wanted to be an accountant. To give some context, around the time I was making decisions on my education, the country was in transition to the free market economy. This started in the early ‘90s, but in the first five years nothing much changed.
I opted for business school through a process of elimination; I was no good at science or history, but I had a talent for languages and maths and that made business school an obvious choice. I chose a progressive university that had a number of foreign lecturers, used a Western style of teaching and conducted some lectures in English.
My graduation with a Polish-focused academic education in economics coincided with the new millennium. I took a Masters degree in Denmark, where I realised that I wanted an international career. I knew that to achieve my goal, I needed to broaden my experience away from academia and obtain a strong grounding in relevant, internationally-focused, business subjects.
By the late ‘90s several of the international consulting companies had a presence in Poland with the ‘Big 5’ among the most desirable for young professionals. Although I obtained a job with Arthur Andersen in June (scheduled to start in September), the company dissolved over the summer and was absorbed by Ernst and Young.
Ernst and Young was in the process of changing the employee value proposition from offering ACCA to the Polish Certified Accountant but as part of the mandatory induction course, they still offered the ACCA modules.
IA Bulletin: What attracted you to the ACCA qualification and what do you perceive to be the benefits of ACCA over other professional qualifications?
ACCA was very widely known in Poland. It had an excellent reputation and brand image. Almost every day I met people who had some connection with the qualifications or were studying for the exams. Many of my network peers had recently started roles where ACCA was offered as an incentive study benefit; or were seeking to move into roles where ACCA was a preferred qualification.
Given my desire for an international career, I knew that ACCA was the best option for me because it had an international focus and taught modern, cutting edge techniques and theories as well as the practical aspects of accountancy which encouraged finance partnering with the business to provide deeper and wider insight. I wanted to progress towards becoming a CFO or vice president of a business as part of a long term international career, and therefore I felt I needed to understand drivers, be able to translate the information and explain the numbers back to the business to drive decision–making. This meant it was important for me to follow the international qualification path.
IA Bulletin: What attracted you to internal audit?
I completed my ACCA qualification in my next role with PwC in The Netherlands and obtained membership while predominantly performing external audits. However, I didn’t see my career path being within the profession and resulting in partnership. I was more interested in working in a commercial business environment and internal audit was my bridge to the corporate world.
Shell was just coming through the reserves scandal in 2006 and was seeking high quality professionals to supplement the internal audit function as part of a drive to professionalise the department. This was vital given the scrutiny of the company at that time. I was able to transfer my external audit skills to obtain a position within the finance team of Shell internal audit.
IA Bulletin: What was your focus/experience during your time in internal audit?
My primary focus was on upstream finance; I specialised in Treasury auditing but I also gained experience of other audits, including operations and health & safety.
I firmly believe that if you have good audit skills, judgement, an ability to ‘grok’ the issues from a vast amount of data, draw conclusions and use your communications skills you don’t have to limit yourself to a single area of audit. The focus needs to be on the risk management, not on how well the auditor knows the process. Good auditing is about identifying the right risks, prioritising them, and ensuring management has exercised good judgement in developing the right responses to manage risk.
Audit’s role is not to sit on management’s seat. Management decides which risks to manage and the priority and response actions; auditors independently assess whether the decisions taken by management have created or destroyed company value. Audit should not advise the business by consulting, but the line is very thin.
It doesn’t mean that during the audit when building the relationships with the auditee you cannot share your opinion and knowledge, as long as you do it in such a way that it cannot be seen as instructing the business. For example, you can challenge management on whether they have identified all the risks associated with their chosen course of action or share examples of good and bad practice and experience of what you have seen elsewhere; that is how you maintain independence. This is very powerful because you are not standing as an arrogant wise man, but are seen as someone who gathers information and shares it willingly with the business.
IA Bulletin: Do you have any suggestions on how the ACCA qualification could be developed to be more relevant for internal auditors?
When I studied the qualification, risk management was not that strong, but I’m pleased to see that this has changed and there is now a dedicated paper on this. This area should be emphasised and strengthened.
Strategic planning and strategy implementation is another area where there is a dearth of skills. In particular, determining the right strategy and understanding that it is about what the company chooses to do and, as importantly, chooses not to do. This is what differentiates one company from its competitors. Accountants should help by providing the business with the right lenses to give it a measure of value for money, define the right path and identify the correct metrics to monitor progress towards its goal. It also needs to be ready to intervene and escalate to management when the metrics indicate that either the path is wrong or the goal needs to change. Accountants should bring rigorous structure to the discipline and performance appraisals; that adds huge value for any company.
Finally, soft skills are critical for accountants these days. It’s not just about the technical skills and calculations, it’s about how you talk about the numbers and explain them to people to obtain buy in for actions. Accuracy alone is insufficient. Accountants need to explain the risks in the way a business can understand, what the numbers mean in terms of achievements, and also understanding and identifying what to share versus what to withhold.
Many accountants fail in this area and therefore are ignored even though they are correct in their view, purely because they are unable to effectively present the information. This is a skill that the internal audit process can help to develop. It starts with listening and understanding, absorbing information, making judgements on where to focus and which issues to pursue versus which to drop, and ends with conclusions and selling the message to management in such a way that they accept an issue that needs to be addressed and take effective actions.
IA Bulletin: Do you believe both ACCA and a role within internal audit can be a springboard into a management role?
Audit helped me a lot in shaping my skills, but also in practical ways with allowing me to connect to the business and educate myself on how to develop my career. Everyone has to define for themselves what their career path will be, sometimes taking risks if required. For example, I moved out of audit in 2010 into a business role that was not perfect, but nine months later I was opportunistically promoted as a result of someone leaving the company. I then moved to a different part of the business when another opportunity was offered. You have to make the best of the roles you are given to create your own opportunities.
Auditors frequently undersell their own skills and do not realise their value in transferable skills to the business. Fundamental core audit skills are in very short supply yet are vital to most areas of business.
I prefer to think of leadership rather than management roles. Management roles tend to be associated with staff reporting responsibilities whereas leadership roles are aligned with strategic progress. When I think about leaders, I think about either someone who people want to follow or someone who breathes fresh air. The former is very much personality based, you either have it or you don’t; whereas the latter can be developed through education and soft skills.
If you surround yourself with energised people who are looking at new trends and you maintain professional education you are always in the forefront. It is like a second sight, based on a combination of experience, intuition and connection with peers in other organisations. You can see the big topics before those around you start talking about them, and you can anticipate things and use your judgement as a professional; you can be a forerunner that shapes the discussions. This gets noticed and pretty soon you become recognised as a leader.
IA Bulletin: Do you have any words of wisdom for those starting out on their audit career?
Don’t be too eager; be open and enthusiastic, but never over-promise and under-deliver. Temper your enthusiasm with prudence and you will succeed.
Michal Wolszczak – senior portfolio and planning adviser, Shell Exploration and Production BV