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People Skills for Auditors-Sonia Luna Interviews Manny Rosenfeld

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Manny is Senior Vice President of Internal Audit at MoneyGram International. He has had the privilege of serving four Fortune 500 industrial companies and a leading global financial services organization during his 34-year career.   Manny has served as Vice President of Internal Audit at Commercial Metals Company, TRW Automotive and Navistar Corporation.  He also had an extensive career at Alcoa and led audit functions in Spain, Brazil, Great Britain, Italy, and China. 

He serves on the Board of the Dallas Chapter of the Institute of Internal Auditors, where he leads the Chief Audit Executive programs.    Manny is a Certified Internal Auditor and has a Certification in Risk Management Assurance.  He also achieved a Lean/Six Sigma Black-Belt designation.

Manny is the author of several publications, including his latest book, due out in September of this year on Amazon.com, entitled People-Centric Skills: Interpersonal Communication for Auditors and Business Professionals. 


0:06 Sonia Luna

Hi! I'm Sonia Luna, CEO and founder of Aviva Spectrum, an internal audit and compliance consulting firm headquartered in sunny Los Angeles, California. I am also a well-known speaker on topics like COSO 2013, SOX 404, Quality Assessment Reviews, Internal Auditing and related topics. Today's interview is with Manny Rosenfeld. Manny is a Senior Vice President of Internal Audit at MoneyGram International. He has had the privilege of serving for Fortune 500 Industrial Companies and a leading global financial services organization during his - yes this is very impressive - 34-year carrier, that's wonderful Manny. Manny have served as VP of Internal Audit at Commercial Metals Company, TRW Automotive and Navistar Corporation. He also had an extensive career with Alcoa and lead audit functions in Spain, Brazil, Great Britain, Italy and China. He serves on the Board of the Dallas Chapter of the Institute of Internal Auditors where he leads the chief audit executive programs. Manny is a certified internal auditor and has a certification in Risk Management Assurance. He also achieved a very prestigious Lean Six Sigma black belt designation. Manny of the author of several publications including his latest book, due out early this year in August on Amazon.com entitled "People-Centric Skills: Interpersonal and Communication Skills for Auditors and Business Professionals". Welcome Manny.

1:55 Manny Rosenfeld

Thank you Sonia. Great to be with you and with your audience.

2:00 Sonia Luna

Well, we are really excited to have you as a guest again. The last time we had you on it was talking about that best of retools and what we could in terms of our profession, taking it from good to great. We've got a great response from our listeners and we wanted to have you back on the show to talk about this new book. So can you tell our listeners the main highlights they can expect out of your new book. Not to mention, what was your inspiration for writing it?

2:36 Manny Rosenfeld

Sure Sonia. My coauthor, Danny Goldberg, and I have thought for a long time that to really succeed, one just need much more that just technical skills. Good technical skills get you in the door, but to be an effective auditor or to be an effective professional, you need to master interpersonal communication and other soft skills. We coined the term people-centric skills as a casual for all those other soft skills and we abbreviated this as PC skills. So in general _3:14_ get a great deal of very formal training on technical skills. They get accounting, business degrees, professional certifications, and continuing education usually focused on technical skills however they hardly ever get people-centric skills training. And these PC skills are usually developed over a long period of time and usually to a very painful interactions and sometimes these interactions are so painful that the auditor has to leave the organization. Usually when an auditor fails it is usually a failure of interpersonal and communication skills, not a failure of technical skills. So our book is meant to raise awareness on these critical PC skills, provide guidance and suggestions for improving these skills and in that sense it is meant to shorten the time for auditors and other business professionals to get fully effective. Also, as I am sure you know the IIA has recognized non-technical skills as essential to success.

4:26 Sonia Luna

Yeah, I was at, it's called the Institute of Internal Auditors Leadership Academy a few months back and I heard Richard Chambers who is the CEO of IIA and he was hitting the exact same items you were talking about right night, which is this people-centric skills that universities do a great job on the technical side. No doubt. You know, how to calculate audit risk, what are things to consider etc. but the people-centric skills you really need, that it's a life- it's not even an end destination, it is almost like a life-long journey, right? And depending on your coach and/or also your support system in work and in life kind of takes you to this path where you're going to develop and hone in on those people-centric skills. But it's something that is it's more of an art rather than an exact science to obtain them. But it is very credible and Richard Chambers definitely mentioned that in one of his key note speeches during the leadership academy and he actually wanted to come up with a designation for leadership type of certification for chief audit executives and this is actually something in the works of the IIA and they are saying well what does that mean. And one of those issues is well, there is technical stuff, but what about those people skills and leadership skills that are softer skills and obviously harder to measure if they come up with a certification program which is like an IIA leadership certification to say, this individual has the business acumen, the technical acumen but also the soft skills to the lead an internal audit department and that was one of the goals he was mentioning for the IIA.

6:30 Manny Rosenfeld

That's interesting.

6:32 Sonia Luna

I know, it's great going to these leadership academies because you kind of get the latest of what the IIA is thinking about or what the future holds. And speaking of the future, I know you've seen a lot of changes in your 34-year career, which is an awesome accomplishment being in this profession, how do you envision organizations will approach this latest change, it's very hot now in the market place being talked about which is the 2013 COSO Framework.

7:05 Manny Rosenfeld

Sure Sonia. I remember when COSO first was coming out early in my carrier, but a lot of changes. Well, as you know, US companies use COSO as their main internal control framework and especially for the SOX compliance programs. The new COSO framework, the 2013 one, lays out 17 principles that were really keep concepts implied in the 1992 framework. So they are not new, they were just codified differently and each of the new principles has points of focus that are possible examples for how management can decide if the principle is in place and functioning appropriately. In my company, we took the existing controls and we match those controls to the 17 principles using those points of focus to see if we really comply with the 17 principles. We concluded that we already met the 17 principles. There were a few controls that we were doing but not documenting them for SOX purposes or including them in the annual SOX testing so we needed to actually imbed those controls as part of our SOX framework. So we needed to update our SOX controls a bit. We also need to reword some controls to align them closer to the language used by the principles. I would say all in all, not too painful for us but I am very glad we started early and I think most organizations may need to go through a similar gap analysis between their existing controls and the 17 principles.

8:56 Sonia Luna

Yeah, I am starting to see some _8:57_ as well in the market place about matching what they already have to the points of focus and obviously it is a principle-based approach, but more importantly, it is still multi-locations, how deep do they want to take this matching set of controls and some of them are calling it a mapping process. However, that being said, even though it is an exercise and they're going through it, most are seeing value in revisiting the framework because a lot of the directors who have taken over, let's say an internal audit department, inherited certain work papers or they inherited certain templates and instead of shaking things up they said look, this work that has got the external auditors happy I'm not about to redo everything, I'm going to go with the status quo, now that the framework is in, this has given the chief audit executives almost a good review, if you will, of those core concepts that were part of the framework and allows them at least maybe a little bit of budget to work with the audit committee and say okay I am really glad I was able to refresh my mapping process of what we actually are doing from both, it could be a compliance objective, it could be a financial reporting objective whatever it is they were using the COSO framework but it gave them some breathing room to actually flex their muscles if you will to update things. Because both the external auditors and the audit committee members realized that if they are not transitioning this year for whatever reason, they are going to have to do it some time in the near future.

10:46 Sonia Luna

And now the question is, will time needs to be spent, let's make sure we're spending it well and it gives, what I am seeing in the market place it gives a lot of breathing room for chief audit executives to kind of flex a little bit and review some of their core work papers that they were leveraging and communicating that to the audit committee.

11:06 Manny Rosenfeld

That make sense, it is a good time to reevaluate it.

11:09 Sonia Luna

Yeah and there's no time like the present, that's what I say.

11:14 Manny Rosenfeld


11:16 Sonia Luna

I understood that, - switching gears to the book - I understood that you took a different approach than a usual business textbook, okay, to get to this book now. Can you tell our listeners about that journey?

11:30 Manny Rosenfeld

Sure. We decided we didn't really want to write another boring textbook. You know with the traditional scholarly multiple points you need to learn a skill and those books tend to sit on bookshelves and often unread. So what we wanted to do is to write a story about a fictional audit department that was a good shop but the chief audit executive, Matt, wanted to be best class. And the audit team is part of a progressive large global company called Multi-Crown headquartered in Chicago and having five large divisions. It's an essence of story with characters and real personalities, they argue, they make up, they work together, they get in trouble, they flirt, they learn, they improve and so it is a story that people can relate to. Matt, the chief audit executive in the story recognized that their biggest challenge is more interpersonal communications in nature. He decided to bring in an outside PC skills consultant, Dolton, to shadow various audit teams and struggling auditors and Dolton provided real time advice on improving the PC skills and helping resolve their interpersonal challenges. So in that sense, the reader learns at the same time as the characters and each chapter is very easy to digest, each chapter has a unique realistic scenario and specific skills are highlighted in each chapter. And then at the end of each chapter, we did a little bit of the text book stuff. We summarized the PC skills that were covered in the chapter as part of the interaction of the characters. And this summary also serves as a future guide for the readers.

13:30 Sonia Luna

That's great. I mean you've captured the story telling side. It sounds like an obviously some of the traditional textbook expectations that a reader might want to find in a book to hone in on their skills, their people-centric skills. So it sounds like, obviously when the book comes out it is going to be more of an easier read and entertaining-er read then your traditional textbooks which is great. Can you give us an example of like, let's say a scenario you wrote about that you feel very passionate about?

14:06 Manny Rosenfeld

Sure. So we have one chapter where a division president, Tom, has been very aggressively attacking the audit team doing their work in one of their Alabama facilities. He is not only resisting their observations but also belittling the team trying to destroy the credibility, and I am sure many in the audience can relate to this scenario. It happened with some difficult audities. Tom had been the head of a small manufacturing unit where he personally was involved in everything. So he did not really like to rely on processes and controls, he wasn't placed to make the decisions. However, he got promoted to head of an entire division and his style of management while might have worked in a small unit, did not work in a full division. So he really need good processes and controls, his business and divisions, business was failing, product quality was dropping, the operations were in chaos, they were losing money and market share. And so, given his views on controls and repeatable processes, Tom had had a history of arguments with the auditors and now that his division was not doing well, he was very, very sensitive about what he perceived as their medaling and what he saw as costly bureaucracy at the time when he wanted to cut cost. So, when the Alabama audit blows up, the Audit Vice President, Matt, has to mobile with his PC consultant, Dolton, to manage this conflict with Tom. And their goal really was to get their relationship to the point where the audit team could continue their work in a professional environment.

16:07 Manny Rosenfeld

So Dolton and Matt, before they headed down, met with the audit manager, they analyzed what led to the conflict and came up with possible strategies and approach to resolving the conflict. So they are down in mobile, they meet with Tom and the fireworks begin. Tom goes through on the attack immediately and Matt and one of his managers they proceed in a pretty systematic fashion to move through their conflict resolution strategy. With Dolton facilitating, there is difficult interaction. And, you know, I don't want to go through the whole thing, there are no group hugs at the end but they all moved to a more constructive and professional place which is really where you want to get to. You don't go from having a conflict to being best friends in one shot, you kind of move along a spectrum. So as a followup, the audit team eventually uncovers a massive fraud in the spare parts inventory and Tom realized too late that the lack of controls really contributed to it. Later in the book, in another chapter, it comes out that the CEO asked Tom to retire early and they hire a new divisional president.

17:27 Sonia Luna

Now, I like this, that last comment about, you know, relationships go through a spectrum sometimes and you're right. I mean, if you're dealing with a difficult person, it is not like the movies where everything has a happy ending. You want to go to a professional state of mind where it's less about personal issues and more about the company objectives. Like we're here at work getting paid to do a particular job or to do a function, to meet a certain objective. And let's get our personal stuff out of the way to meet that objective and you still may not like of agree with a person's view or their style, but you have to get to a professional state of mind and process to meet those main goals and objectives that the company has paid you to achieve. And I like the fact that you didn't put a rosy picture where everybody is hugging and having beers at the end at the local bar because they smoothed out all of their differences. Now, I wanted to get into something that I know our listeners really would want to know, which is kind of a preview for them to want to definitely buy the book, what are the people-centric skills you highlighted in your book?

18:51 Manny Rosenfeld

Sure. Well we just mentioned the conflict resolution chapter. We also have a chapter on team dynamics, how to form and lead a team. In this case, a theme to develop a new operational audit discipline, how do you brain storm ideas in a group setting and then narrow the list to the critical few, something that is very important as part of risk assessment and setting the audit plan. How to understand the corporate culture and various sub-cultures, a lot of people join a company and they really, there is really a mismatch between their old culture and the new culture on they stumble. So this chapter helps identify, helps the reader identify what are the cultural aspects of the new company. Developing effective listening skills and active listening skills, very critical, how to begin to read nonverbal communication and understand gesture clusters. And this is just the beginning; this could be the subject of an entire book. How to coach a new manager, the importance of delegation management style when you have a highly skilled and self-motivated employees, how to mentor a new audit leader and how to establish constructive relationships with a brand new divisional president. And we're actually already envisioning a possible follow-up book with even more advanced people-centric skills such as handling interactions across different cultures. Of course, that will depend on how many people buy the first book, but we're hoping.

20:42 Sonia Luna

Well, we'll see. Yeah, it's kind of a wait and see, but I like the list that you are sharing with us in particular kind of like the team dynamics and them the coaching of that management team underneath the chief audit executive, that is something that I remember at the leadership conference that the IIA had. That was a theme because I lead the chief audit executive program here in Los Angeles for the IIA. That theme of, okay there are certain chief audit executives getting together and they are telling us, you know, our senior managers, the people right below us, need their network and the best in class and other different chapters were doing something similar which is some type of networking or peer group or communication if you will to coach them because they need motivation and they need somewhat to bounce of ideas and maybe it's not their boss per se but just, appear you know. And also, you know at some point, they may want to move up a notch and be their own chief audit executive. So, talking to a network in terms of how their other peers are doing it in terms of interviewing for positions or trying to find positions or trying to figure out when is the right move, you know, it is something that it does take a lot of people-centric type skill to make that determination and work with your peer group and I know that there is definitely a need especially that you have highlighted in your book because you want to motivate your right team players and one measure of success I think is if you are a great chief audit executive, you can actually under your leadership have created a few chief audit executives under your department. You know, they left your department but they became great leaders in other places. That's a testament of your own leadership skills. I mean it's sad that you'll lose a person, but it's also we're _23:02_ to see that someone flourish because you have that ability to coach some into other areas.

23:09 Manny Rosenfeld

Ultimately, this legacy you leave behind is great leaders so that's always worthwhile to help others in the right skills.

23:21 Sonia Luna

Absolutely. Well, this has been a wonderful and insightful interview Manny. And just as a reminder to our listeners, you can find Manny's new book entitled "People-Centric Skills: Interpersonal and Communication Skills for Auditors and Business Professionals" in Amazon.com. Again, thank you Manny for being with us.

23:40 Manny Rosenfeld

Thank you Sonia, thank you to your audience.

23:44 Sonia Luna

Alright, this is Sonia Luna, CEO and Founder of Aviva Spectrum signing off.