Interview with John Bendermacher
Chairman of the IIA Netherlands
8 July 2016
In February you took on the position of Chairman of the IIA Netherlands, but in addition you hold several other positions - Who is the real John Bendermacher?
Oh, I am a hard working guy who learned a lot in his profession and got a lot out of this profession and that is why I want to help build the profession further. It’s not very modest but I want to let people make use of my knowledge and that’s why I am a member of these committees.
If you ask people in these committees how they perceive me, they will say I am practical when it comes to getting things done in the long term, but more importantly also in the short term.
What inspired you to take on this role as chairman of the IIA Netherlands?
I started my first role as Chief Audit Executive (CAE) in 1999 for a small bank, NIBC, with only two people working in Internal Audit, both of whom just came out of external audit. So we all had experi- ence as auditors, but not as internal auditors.
Around that time the IIA popped up in the Netherlands and I made
Interview with John Bendermacher
On 8 July 2016, the IIA Young Professionals Committee interviewed John Bendermacher, current chairman of the IIA Netherlands (IIA NL), on a range of serious and less serious topics, including his vision for the IIA NL, his view on the future of Internal Audit, and his favourite restaurant.
John Bendermacher holds the following positions:
• Director of Group Audit - ABN AMRO BANK
• Chairman of IIA Netherlands
• Member of the Board of Directors of IIA Global
• Chairman of EIAP Programme Board of Amsterdam Business School
• Member of Governance Advising Committee of
Netherlands Institute of Chartered Accountants (NBA)
• Member of Auditing Working Group of Dutch Banking Association (NVB)
• Member of ECIIA Banking Committee
“I am someone who likes doing things
instead of talking about things.”
that time there really was nothing else other than external audit rules and regulations.
At one point I became chair of the committee of the GAIN bench- marking for Financials, followed by the committee for the external quality assessments (EQAs), and the chairmanship of then in the IIA relationship committee.
At one point we realised it’s useless to have a relationship commit- tee unless you have people at board level involved in those relati- onships, simply because people don’t feel valued in a relationship if they only get a committee member to talk to. I raised this with the board of the IIA and they said, “well then you should join the board”.
After the departure of the previous chair, Vincent Moolenaar, eve- ryone looked to me to become the new chair. It was a natural tran- sition. I didn’t think about it too much. Thinking back, I enjoyed being able to steer the meetings and steer the board. That’s nice because I have a vision for the IIA that feels right.
However, the Chairman also has a lot of obligations, like opening our conference - which is not the part I like best. For me the most important part is improving the profession and ensuring that it receives more recognition. These are my drivers. It’s my motivation for being chair.
Apart from your work for ABN AMRO and the various boards - what do you do in your free time?
During the last six months I trained to climb Mount Stelvio and I participated in the Stelvio challenge, which is a fundraising activity for disabled children. 18 colleagues from ABN AMRO participated, as did my wife. Some by walking, some by running, and some by bike. Preparing for this climb took up a lot of my free time over the last 4 - 5 months.
Generally speaking my favourite hobby is tennis; that’s what I do most. In addition, I play in a football league for over-45s, I go cy- cling and I also have a 1959 VW Beetle which I drive for pleasure.
How do you balance your time between all these committees, positions and activities?
Well it’s a matter of discipline. You need to be adamant in keeping to a strict schedule and say ‘no’ if you have other commitments.
“The most important part is improving the profession and ensuring that it
receives more recognition.”
Leen Paape
My week days are also long. I get up early. Excluding the IIA, I work more than 50 hours. Including the IIA, I work over 60 hours.
And you need to be effective during weekends. I also get up early in the weekend, and work for half a day, always. In addition to that I do things around the house and garden.
You know what they say: “If you want something to be done, ask someone who is busy”.
If you were an animal, what animal would you be?
Ermm… my first idea was a dog, maybe a Labrador. I think becau- se it’s a strong dog, but also well behaved.
The Labrador is both strong and friendly. People that know me better know I can be very direct in my criticism. If I am in the Uni- ted States they say “that is a very Dutch reply” because I say what I think. You will hear at ABN AMRO as well that I can be a little too direct sometimes. But I also forgive easily and can be a very nice
Do you plan on making any changes to the IIA operations in your role as chairman?
Firstly, the IIA Office:
We founded the office only last year, and it’s working well in my view, but I think it might have to be expanded at some future point in time.
In the past the IIA NL only consisted of volunteers, who can do great things, but you are very dependent on their commitment.
When one leaves you have a gap. For the continuity of operations it would be better to have a few more permanent positions. We have seven permanent staff members now, but we might need some extra hands on deck in the future to balance activities better.
Secondly, the CAE Service:
With the upcoming introduction of the revised Dutch Corporate Governance Code, all companies listed on the Amsterdam Stock Exchange will need to have an Internal Audit Function.
As a result, a lot of new Internal Audit Functions will be set up in the coming year. To be able to deliver on our promise to the moni- toring committee, we need to make sure these new functions get a kick-start in terms of getting up to standard and up to speed.
“I have two sides; I can be strong,
but also friendly.”
“We need to keep the promises we have made to the Corporate Governance Monitoring Committee. If Internal Audit Functions don’t perform up to standard, a lot of damage could be done in the next 3-5 years.”
However, if we, as Internal Audit Functions, can prove ourselves by executing audits well, adding value and being the trusted partner in governance, as demonstrated by our performance of the
mandatory External Quality Assessments (EQAs), we will be an established part of the Governance Code in future.
We therefore decided to create a new CAE Service. This provides new CAEs with the tools, knowledge and practices needed to per- form according to the IIA standards. It will include:
• Templates and documents available in multiple formats, such as a charter, an internal audit manual, a risk assessment and planning tool, customer satisfaction templates, etc.
• Mentoring to be performed by well-established Chief Audit Executives and 2nd level internal audit management.
• We will also provide benchmarking and round tables to facilitate the further spreading of knowledge and best practices across all Internal Audit Functions in the Netherlands.
• In addition, the IIA partners are expected to play an important role in bringing internal audit functions up to speed and up to standard as soon as possible.
If you had to give an elevator pitch about why a young auditor should join the IIA what would it be?
First of all, joining the IA profession is a great career starting point for young professionals. If you want to learn about a company and all aspects of governance then IA is one of the greatest roles you can have. That also explains why in the US every manager needs to spend a certain period within Internal Audit and learn what it means to control and be aware of risks and think about risk responses.
One important aspect of joining the IIA is the IPPF standards;
it’s important to have standards within the IA profession. Becoming a member teaches you this.
The education part is also a good reason. We have the Academy, round tables and the conference, as well as the Young Professio- nals Committee. Being a part of this committee is also a great experience!
“We need to keep the promises we have made to the Corporate Governance Monitoring Committee. If Internal Audit Functions don’t perform up to standard,
a lot of damage could be done in
the next 3-5 years.”
And you know everyone who joins our profession now is a future CAE; everyone has a talent. If you like this profession and want to grow in it, there is a lot of room to make a career.
Sometimes people perform an internal function for a few years and then spin off into the business. That’s fine too.
As an auditor you probably talk to the executive board and even supervisory board at a very early age. In Internal Audit that line is much steeper. Furthermore, cooperation with the external auditor is very important later on in your career.
The IIA is where you can share experiences and share best prac- tices, for example at the round tables, the innovation awards or at the conference.
What are your favourite bars or restaurants?
Wow, do I have a favourite restaurant? I had a favourite in New York, but it closed. My favourite now is the “Viersprong” in Vin- keveen. My son works there and that’s why we go there. It’s very small and very old but has a nice atmosphere.
Do you have a favourite beer?
Yes, Brand - a brand of lager.
What do you see as the most exciting innovations in the world of auditing at this moment?
The two biggest areas of innovation I see are in culture and behavi- our and also data mining for Internal Audit. Auditors need to grow in both areas.
Firstly, Culture and Behaviour - I see there is a lot of training in this area. But the development I see is that a lot of emphasis is given to the cultural part as a container; we try to find things to improve the culture. But I don’t see the link yet between tone at the top and the social control and self-control you need in daily operations. At the end of the day it’s a question of whether people do it or don’t do it.
Do people take the cake or leave it, do they drink a third beer or not? It is similar to whether or not you rubber-stamp expense re- ports. Are you relying on trust or really checking?
My dad was a policeman. He said “the biggest fraudsters are in the front pew in church”. Sometimes the people receiving the most praise can be the biggest crooks. I have seen so many frauds (small frauds); everybody has his price. So the difficult part is to translate culture and values into real behaviour in processes.
“Internal Audit is the start
of a great career.”
At ABN AMRO we found that workshops can be very effective.
Every time we do a survey, when we have say 3-4 people raising an issue, we set up a workshop to show the results of the survey.
This method opens the floor for more transparency from the others participants, because they see that other people have also raised similar issues; that makes it more acceptable to talk about it. These workshops are also a very effective means to develop solutions be- cause people can brainstorm realistic solutions to everyday issues.
Secondly, Data Mining - Not paying attention to this area will put us out of business sooner than the soft controls. To be honest, I was amazed by the EY presentation on data analytics at the IIA conference two years ago. The insurance firm DELA also gave a presentation at the IIA Innovation Awards last year. I am always amazed by the new things that are taking place in this field.
When I started in Internal Audit, there was no data mining and no data analytics. Then we started asking for data and doing analytics using Excel in an amateur way, and even those techniques were sufficient to prove points and prove that someone needed to pay taxes, for example.
It amazes me that auditors are taking so long to make greater use of analytics. It amazes me we are still taking samples of 25.
We need to explore and develop and continuously improve.
In April 2016, the IIA wrote an open letter to the NBA calling for greater recognition of ‘ROs’ by the NBA - Do you feel this has since been accomplished?
Yes. In fact the letter would not have been necessary if there had not been a mistake in the NBA’s publication. I got a phone call af- terwards because it was simply a mistake in their publication; they accidentally left out the ‘RO’ title in their list of professional qualifi- cations for providing assurance and audit work, which includes the titles of RA and RE.
Recognition of the RO title is important for the complementary roles of internal and external auditing, because if external auditors use and rely on internal audit work, they have to recognise the RO title and recognise the quality of work associated with it.
The IIA1 requires all IAFs where the IIA has members to submit to an EQA - what are the consequences of non-compliance?
That’s a good question. Firstly, I see a difference between non-compliance and non-participation.
Non-compliance means the results of the assessment showed that the IAF’s performance is not in accordance with the standards.
In that case, the CAE and his/her board will get a letter asking the CAE to report to the board that they are not in compliance and to
1 Under its “Regelement Kwaliteitstoetsing Interne Auditors” (rules for quality assessments of
explain why. The CAE will also need to provide a road map of what actions need to occur to become compliant and send this to the IIA. A second review is then set up for a future date. The conse- quences of non-compliance for the IAF is also that they cannot use the sentence “this audit was performed in accordance with the IIA standards” in their audit reports, which of course is a stamp you would like to use.
Non-participation means you don’t submit to the EQA at all. In the- se cases, we can and will potentially revoke IIA membership for the CAE and maybe even for the whole Internal Audit Department.
So far, however, we have not revoked any memberships. The rules were introduced in 2008 and in the beginning they were more or less voluntary. After we had gained a full picture of all IA functions in the Netherlands, we started getting stricter. Now it is time to respond forcefully to resistance.
As we speak, there is a new governing body being formed that will organise the reviews and also review the people doing the EQAs.
This body will manage cases of non-participation. The conse- quences will be: firstly, a written letter to the Chief Audit Executive explaining to them the IIA requirements, forcefully asking them to participate, and requesting an explanation about why they will not comply. The IIA can be flexible and accommodate delays if there is good reason.
Does a negative result of the EQA have consequences for the RO title of the internal auditors involved?
If the overall conclusion of an external quality assessment is that the IAF is not in compliance with the IPPF, the IAF will be given the opportunity to fix the problems. A follow-up review will then be conducted. If the result is again negative, disciplinary actions will follow. Membership might be revoked. For ROs, this means they are no longer permitted to use their professional title.
What is your view on the IIA Young Professionals Committee?
I like the Young Professionals Committee because it’s very active.
Communication between the committee and the board has im- proved a lot over the last 18 - 24 months.
At the same time, the cut-off at 35 is a little odd. It means that people over 35 are excluded from your events, and they are good events. It’s odd because I think there are some people who are 30 who are not very active and don’t participate in our profession, but you also have people who are 40 who have a lot of energy and want to participate, but are excluded from your events.
I also think it’s important that people early in their career talk to each other to share best practices and have job mobility, and you need to inspire people to develop. The Young Professionals Com- mittee is good at that.
What is your favourite place to go on vacation?
Austria - for skiing, specifically Saalbach Hinterglemm.
Finally, what would you like to leave behind as your legacy as chairman of the IIA Netherlands?
I think Vincent Moolenaar left a legacy which was establishing the IIA Office. This is very much appreciated. Together we strived for a better position in the next Dutch Corporate Governance Code. That was achieved and is part of my legacy as well.
The next step we need to take is delivering on our promise to the monitoring committee to improve the level of quality in executing audits across the IA profession; quality needs to go up by one notch. Since my period will be ending in late 2017, I hope my lega- cy will be raising the bar of quality in our profession. I aim to achie- ve this through the CAE Service and through the IIA Academy. If we go up by one notch, there is a good chance that the IA profes- sion will gain recognition and through recognition gain influence, knowledge and people.
The developments we have accomplished with our partnerships are one of the achievements that in the longer term will be part of my legacy as well.
The partners are important. There might be up to 6,000 internal auditors in the Netherlands, while the IIA NL has 3,000 members, but within the partners there may be another 1,000 people active in the field of Internal Audit.
Our strategic partners also play an important role in raising the bar of professional standards for Internal Audit. They benefit from their partnership with the IIA, and the IIA benefits from their contributi- ons in terms of content and drive.
Our partners also provide startup services, outsourcing or co-sou- ring; they are actively part of the professional practice of Internal Audit. If we didn’t have them as partners, we would not have this professional practice in scope. Now they are with us and they are real partners of the IIA.
Interview conducted & written by Jack Mills
Senior Advisor, Internal Audit Services, EY, (IIA Partner)
