So, An Internal Auditor Walks into a Bar…

It's funny -- after covering governance and compliance issues for 11 years, I've found that some things change but most things stay the same.

What's changed is the sheer volume of discussion -- in print, on television and online -- of "GRC" topics. Crack The Wall Street Journal any day of the week, and you'll find enough compelling articles on risk-management failures to, well, fill a blog.

Before I finished my morning coffee during the past two days, I downed stories on:

• Big pharma's supply chain risk management breakdowns in China;

• Peter Lynch's possibly inappropriate U2 concert-going;

• Washington Mutual's "shielding" of executive bonuses from the nasty housing crisis;

• Reg SHO's "new teeth;"

• Corporate governance turbulence in Germany; and

• A passionate op-ed on mark to market accounting.

Here's what hasn't changed: most executives and managers remain uncomfortable talking about governance, risk management, and compliance. Try cold-calling a corporate PR department to ask them if their CFO or head of internal audit will have a discussion about supply chain risk management, ethics guidelines, executive pay, controversial SEC guidance, or accounting rules. The call ends abruptly, and there's rarely a follow-up.

That's why it's so refreshing to find candid and fresh insights on GRC issues. This pleasant experience happened to me most recently when I talked to the internal audit chief (Steve Patterson) at one of the world's fastest defense technology companies (DRS Technologies). He identified the three most important qualities he looks for when trying to out-recruit internal auditors from competitors and public accounting firms. What's refreshing about that? He named a sense of humor as an important skill:

1. Auditing and financial acumen: Patterson, a CPA, wants his new hires to at least possess an accounting degree. Almost all of his current internal auditors possess CPAs; those that don't have strong "intangibles."

2. Intangibles: Patterson wants to hire human beings who are friendly but assertive. He wants his auditors to go into business units and extract information without rubbing the business unit's staff the wrong way. He says he really wants people who have a sense of humor and a "sense of adventure."

3. Willingness to put up with the travel: The decentralized structure of DRS requires internal auditors there to hit the road about half the time.

I'll write a lot more about Patterson and his experience in building the function from scratch during the past four years in the April issue of Business Finance.