Kennesaw State business professor’s research reveals keys to successful relationships for chief audit executives

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New study aimed at auditors and executives can improve business communications

KENNESAW, Ga. (March 22, 2013) — When “the left hand doesn’t know what the right hand is doing” in business, there is a fundamental disconnect and miscommunication. One Kennesaw State professor is determined to break through those business barriers that hinder communication between chief executive officers, chief financial officers and internal auditors.

“If you have shared goals, shared knowledge, good communication and mutual trust, then the relationship is strong,” said Sridhar Ramamoorti, associate professor of accountancy in the Michael J. Coles College of Business at Kennesaw State. “If there is misalignment, misunderstanding, miscommunication and mistrust, that pernicious combination could spell disaster for the organization.”

Ramamoorti, along with two colleagues, studied the relationships between chief audit executives (CAE), chief financial officers (CFO) and chief executive officers (CEO).  The researchers found four core elements of successful business relationships:

·         Create shared goals about internal audit’s role and priorities

·         Build shared knowledge about the organization and internal audit’s role

·         Establish mutual respect for internal audit capabilities and leadership

·         Enable high-quality communication that anticipates and responds to organizational imperatives.

Ramamoorti said he was surprised by how the intensity of the candid communication among CEOs, CFOs and CAEs to advance organizational goals of the company predicted superior corporate performance. Communication is critical to performance effectiveness, he added.

If CAEs possess a high degree of “relationship acumen,” or ability to initiate and develop strong connections, Ramamoorti explained, they are successfully able to revitalize their relationships, enhance communications and build better rapport with the executive suite, leading to better organizational outcomes. 

“The importance of these strategic relationships has been intuitively obvious to chief audit executives for a long time,” said Ramamoorti. “Our primary goal is to close the ‘expectations gap’ by highlighting the added value that the internal audit provides within the organization. CAEs were already perceived by the interviewed executives as credible and competent.”

The 15-month study was based on on-site interviews with CAEs, CFOs and CEOs at 13 leading organizations in the U.S. and Europe, such as Humana, Nordstrom, Wells Fargo, BHP Billiton and AkzoNobel. The study examined ways CAEs should cultivate and nurture healthy and productive relationships with members of the executive suite.

The advisory focus group for the study included Kennesaw State University Provost Ken Harmon; Paul Sobel, CAE of Georgia Pacific and incoming 2013-2014 Institute of Internal Auditors (IIA) Chairman of the Board; Richard Chambers, IIA Global President; Eric Hespenheide, Deloitte partner; Richard Mueller, CAE of American Electric Power; Herman Baars of Impactz Consulting (Netherlands); and Susan Ulrey, a principal and director with CliftonLarsonAllen.

Funded by The Institute of Internal Auditors (IIA) Research Foundation, Ramamoorti
co-authored the study, “CAE Strategic Relationships: Building Rapport with the Executive Suite,” with Mohammad J. Abdolmohammadi, professor of accounting at Bentley University and Gerrit Sarens, associate professor at Université Catholique de Louvain (Belgium). 

In addition to serving as associate professor of accountancy in the Coles College, Ramamoorti is also director of board culture and behavioral dynamics for the Corporate Governance Center at Coles. He is a 25-year member of The Institute of Internal Auditors. Ramamoorti has more than 15 years of corporate experience as a former corporate governance partner at Grant Thornton LLP’s national office and as the Sarbanes-Oxley advisor for Ernst & Young LLP. 

 

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Kennesaw State University is the third-largest university in Georgia, offering 80 graduate and undergraduate degrees, including doctorates in education, business and nursing, and a new Ph.D. in international conflict management. A member of the University System of Georgia, Kennesaw State is a comprehensive, residential institution with a growing population of 24,600 students from more than 130 countries.