Internal Auditing Around the World, Volume 15: Delta Air Lines

Internal Auditing Around the World Vol 15 Profiles
Internal Auditing Around the World, Volume 15: Delta Air Lines
Delta Air Lines

"When people discuss internal audit transformation, they tend to focus on the application of new tools and processes to audits. We also think a lot about innovative staffing. For us, that means considering how to deploy a combination of several different labor types."

- Brandi Thomas, Vice President - Corporate Audit


Delta Air Lines has covered a lot of ground since its humble launch in 1924. Founded as a crop dusting operation, the company has grown into one of the world’s largest global airlines. Today, it serves close to 200 million customers annually, ferrying them on 15,000 daily flights to and from 304 destinations in 52 countries on six continents. Delta’s approximately 80,000 employees help the company maintain and operate more than 800 aircraft. As a founding member of the SkyTeam global airlines alliance created in 2000, Delta participates in joint ventures with global partners such as Air France/KLM, Alitalia, and Virgin Atlantic.

Thomas says that she is “relentlessly focused on developing the leadership of the future — diverse teams with contemporary skill sets.”

Like other major carriers, Delta continues to adjust to the industry’s overall improvement following the severe turbulence the sector experienced before and throughout the global financial crisis. Delta filed for bankruptcy in 2005 and emerged following a restructuring less than two years later, on the cusp of the historic economic downturn.

“All airlines went through an extraordinarily difficult period,” notes Delta Air Lines Vice President — Corporate Audit, Brandi Thomas, referring to the waves of bankruptcies, restructurings and consolidations that con­tinued occurring in the industry through 2013 or so. “A lot of pride and camaraderie exists throughout Delta as a result of overcoming such major challenges.”

Delivering Delta’s Flight Plan

Delta hired Thomas in 2017 to oversee the company’s corporate audit team. The responsibilities of the function — which consists of 21 full-time auditors and a handful of co-sourced auditing professionals — include generating and completing the annual corporate audit plan and Sarbanes-Oxley (SOX) compliance. Delta’s leadership bio for Thomas also indicates that she is responsible for “fostering world-class technical audit and leadership development training within her group.” Thomas reports administratively to Delta’s CFO and on a functional basis to her board’s audit committee chair. Prior to joining Delta, Thomas headed, and also built from the ground up, Uber’s internal audit function. Prior to that role, she rose through the internal audit and corporate finance ranks at General Electric, Nordson Corporation and Intuit.

One of Thomas’s first moves upon joining Delta two years ago was to work with her team to create this functional mission statement: Delivering Delta’s Flight Plan — the company’s annual strategic goals — through innovative risk management and collaborative solutions to add value and enhance Delta’s operations.

A commitment to innovation is evident in numerous auditing activities and initiatives, including applying robotic process automation (RPA) to SOX testing, the function’s growing use of data manipulation and visualization tools (as well as their work in training other groups within the company to use these same tools), the use of hackathons (to identify new correlations from existing data), and the function’s staffing model.

Thomas says that she is “relentlessly focused on developing the leadership of the future — diverse teams with contemporary skill sets.” To that end, the function’s internal training and development activities focus on traditional competencies (e.g., influencing and negotiation skills) as well as digital-era capabilities. “We’re equipping our team with skills around coding, data aggregation and analysis, visualization, and linking audit objectives and findings to strategic priorities,” notes Thomas. She stresses that internal audit transformation can be applied broadly and that it requires a process-first mindset. “I can’t emphasize enough,” Thomas continues, “that the technology follows a solid process for its integration into auditing methodology.”

"Inside the function, internal auditors have applied their data analytics skills to sharpening the insights they share with the business and devising more effective ways of presenting improve­ment opportunities to their partners."

Transforming Into Analytics Teachers

The internal audit team’s recent innovation and transformation activities include a significant amount of work related to data analytics.

Those efforts begin with what Thomas describes as “foundational” skills develop­ment. Internal auditors learned how to use and/or optimize analytics-related tools and applications that are deployed across the company, including Power BI, Hyperion, and SQL, as well as data visualization tools. This training has helped the internal audit team “build data analytics into our methodology,” Thomas says.

The training proved so effective that it made sense to extend it to other parts of the company pursuing similar innovation and transformation plans. As Delta’s CFO began to share plans regarding corporate finance’s digital transformation, “we sort of raised our hands and said, ‘We’ve been on a similar journey for a short period of time, and we can provide some help,’” Thomas says. “We had already aligned with Power BI, so we realized we could beef up the training material and offer that as a service to other groups in the company.”

Inside the function, internal auditors have applied their data analytics skills to sharpening the insights they share with the business and devising more effective ways of presenting improvement opportunities to their partners. Delta auditors pored over all of their medium- and high-risk auditing findings from the past five years and used their analytics skills and tools to identify new correlations. “We combined those insights and gave the business a barometer that shows them where they’re improving and where they may be regressing,” Thomas says. “It gives them more actionable insights to respond to.”

Last year, the auditing team also used a combination of Power BI, internal audit management software and a data visualization tool to develop a new dashboard that helps the function monitor its work more effectively and efficiently. “Every Monday, I get an update that shows the current status of our risk-closure process,” Thomas says. “With a quick look, I can see what’s open, what issues need follow-up and which auditors are addressing those issues.” The function is now working on creating similar dashboards that make extensive use of data visualization for business partners responsible for operational and fraud risk and other areas. “We’re really excited about taking large quantities of data and drawing insights that help the business,” says Thomas, who stresses that those insights can drive process improvements in addition to ensuring adherence to policies.

Thomas says she is also excited about developing more innovative approaches to staffing her function. “When people discuss internal audit transformation,” she notes, “they tend to focus on the application of new tools and processes to audits. We also think a lot about innovative staffing. For us, that means considering how to deploy a combination of several different labor types.” These categories include full-time employees (what she refers to as “on-balance-sheet labor”), rotational workers (on loan from other parts of the company), co-sourced talent, gig workers, crowdsourced assistance, digital labor (e.g., RPA) and freelancers. “When I was with Uber, one of my top auditors left to raise her children, and we missed her tremendously,” Thomas recalls. “She was skilled in most aspects of the profession, and she was also an excellent storyteller and deck-builder. During our busy season, we would hire her on a freelance basis to build decks with us. She was familiar with our process and knew our audience very well. With techniques such as these, we can keep those in the workforce who choose to focus on family for a bit engaged in the workplace. I am happy to report that this talented woman is now CAE of a healthcare company after a few years focused on raising her children.”

"The on-loan IT expert helps bolster inter­nal audit’s technical expertise and then promulgates audit’s risk and controls mindset upon returning to the business."

Given the industry’s ever-present cost-constraint challenges, Thomas does not expect to ever have a glut of on-balance-sheet labor on her team. “So, we need to find innovative methods of expanding and contracting our workforce to meet the needs of the business,” she adds.

Secrets to Transformational Success

As Thomas discusses Delta’s approach to internal audit transformation, particularly as it relates to data analytics and staffing, she stresses the value of several approaches and tactics, including:

  • Addressing a comprehensive set of considerations: While Thomas advocates the value of new staffing models, she recognizes that these approaches require careful supporting considerations. Her team worked with Delta’s IT function to create a rotational program through which an IT professional joins the audit team for 24 months. The on-loan IT expert helps bolster internal audit’s technical expertise and then promulgates audit’s risk and controls mindset upon returning to the business. “As we designed the program, we had to address several important considerations,” Thomas explains. “For instance, how can the person working with us stay connected with the IT organization? So, we arrange for our IT resources to continue to attend their function’s monthly performance reviews and meet once a month with a VP-level IT mentor. We also have an agreement that the person will have a guaranteed placement after the two years conclude. I think some rotational programs neglect what life is like after the rotation, and we did not want to do that.”
  • Putting process before technology: “It’s very sexy to go to the advanced technology tools first,” Thomas says. “But we’re all about process first, tools second.” Process first means focusing on the underlying methodology and the changes that the introduction of new technology requires. “When you’re engaged in digital transformation, some team members are always down for anything new while others are more reticent to change,” Thomas notes. “You need to focus on getting everyone on the same page regarding what the expectations are.”
  • Leveraging other innovations in the company: Thomas explains that internal audit “links to various transformation activities that are happening across the business” in an effort to make efficient use of existing knowledge, technology and talent.
  • Assigning full-time responsibility for pivotal innovations: Getting a full-fledged data analytics capability — within internal audit and most other functions — off the ground is very difficult, Thomas stresses. That’s why she dedicated one of her team members to leading the function’s data analytics group on a full-time basis.

Thomas and her team rely on other hacks to ensure their odds of success, including one that she does not articulate, but certainly demonstrates: Lead with humility.

“We’ve made significant progress due to the collective effort of an amazing team that has been open to change and has gotten on board with transformation,” she adds. “I’m the mouthpiece, but I take no credit for it. I’m really, really impressed by what my team has achieved.”

"Thomas and her team rely on other hacks to ensure their odds of success, including one that she does not articulate, but certainly demonstrates: Lead with humility."

 

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