2012

I have written frequently over the past three years about the refocusing of internal auditing’s priorities around the world. The era of extensive focus on the effectiveness of financial controls is a thing of the past for most internal audit departments. Instead, annual internal audit programs in 2012 are apt to be more equally divided between operational risks, financial risks, and compliance risks. Emphasis on IT and fraud risks also has increased since 2008.

With internal auditing’s focus having been transformed, it is only natural that the requisite skills needed by internal auditors would have changed, as well. The recently published Global Pulse of the Internal Audit Profession survey results by The IIA’s Audit Executive Center confirmed very dramatically how much the requisite skills for internal auditors have changed.…

I have written extensively over the years of the need to improve the timeliness of internal audit results. Nothing undermines the value of an internal audit more than delivering the results when it is too late for management to correct a problem or too late to avoid further fraud, waste, or mismanagement.

​If lengthy untimely audits are one extreme, the other is what I call “drive-by” internal audits. These are so-called internal audits in which either canned internal audit programs or checklists are used to facilitate a quick audit or report. In the financial services and retail industries, branch or store audits are sometimes conducted in this manner.…

​“We are here to help you!” This phrase seems so innocent, but at The IIA’s recent International Conference in Boston, I once again heard those six little words referred to as “the biggest lie of the internal audit profession.” As the old joke continues, the second biggest lie is management’s response: “We are glad you are here!”

The great majority of internal audit professionals are truly collegial in their relationships with clients, and hopefully most of our clients really are glad to see us. But maybe it’s time to take a hard look at how we are viewed and how we can change mistaken perceptions about internal auditors in the minds of skeptical clients.…

The concept of rotational internal audit staffing is not new. General Electric’s internal audit function, for example, has employed a purely rotational model and served as a “talent pipeline” for the company for decades. But in the past 10 years, an increasing number of companies have restructured their internal audit departments to include rotational positions and strategically support their companies’ talent needs. According to recent surveys, almost one-third of all internal audit groups now use rotational staffing models. 

At first, the issue may seem simple: Should internal audit be staffed with career professional internal auditors, or should it deploy a rotational model and become a “talent pipeline”?…

As a young auditor, nothing was more frustrating to me than presenting a great audit recommendation or new idea to an audit client (or “auditee” as we called them back then), only to be met with waves of skepticism and negativity. I knew my message was important, but at times it was challenging to overcome the mistrust and fear seemingly engendered by the mere fact that the recommendation came from an auditor.

Looking back on those early audits, I now realize that some of those communications breakdowns could have been avoided. The realization came slowly to me: I didn’t completely understand why I sometimes had difficulty in “selling” recommendations until a particularly frustrating exit meeting.…

Myths can tell us a lot about ourselves — or at the least, about how others see the world. But at times it seems that the most inaccurate myths are the most difficult to dispel, particularly if there is a grain of truth buried at the origins of the myth.

The modern internal audit profession has been around for less than 100 years. Yet it is amazing how many myths and misperceptions have evolved about the profession in such a relatively short period of time. And while each of the following myths is generally untrue, the fact that these myths are so enduring might be an indicator that each of us needs to take stock of how we are perceived in our own organizations.…

When I joined the internal audit profession in the 1970s, it was widely understood that internal auditing was a career path. Young professionals, like I was back then, joined internal audit departments staffed with career internal auditors who often had been in the profession for decades.

My, how times have changed. Today’s internal audit departments use diverse staffing models, often employing a mix of staffing approaches to ensure the right “fit” for both staff and the department. Full-time, part-time, career positions, rotational positions, outsourcing, co-sourcing, “borrowed” staff, work-from-home employees… these days, internal audit has it all. And while some departments are still staffed completely by career internal audit professionals, others groups are purely rotational.…

The past few weeks have witnessed extensive media coverage of two subjects for which investors should have taken extensive note: 1) There are an increasing number of high-profile companies whose shareholders are expressing dismay over corporate governance practices, and 2) high-profile initial public offerings (IPOs) have been drawing extraordinary interest from excited investors.

As I contemplate these two phenomena, I am struck by an interesting thought: Prospective shareholders do not scrutinize corporate governance nearly as often as shareholders who have lived with the governance of their companies over a longer period of time. I can’t help but wonder if investors who are caught up in the excitement and promise of IPOs aren’t missing an “elephant in the room”: What type of governance will the new company have once they own a piece of it?…

Internal auditors are ethical — right? After all, we think of ourselves as the “beacon of ethical light” in every organization. If you can’t trust the internal auditor, who can you trust? Yet, at the end of the day, we are also human. We are subject to the same pressures (culturally, politically, and organizationally) as everyone else in the enterprise. So, maybe we are vulnerable after all.

But can we afford the luxury? I think not.

In the past few months, I have become increasingly troubled by isolated instances when the “ethical compasses” of internal auditors appeared to fail — rather spectacularly.…

I admit that I am biased. As one who spent the majority of my audit career in the public sector, I strongly believe that government internal auditors play an invaluable role in protecting our interests. That’s why recent news reports regarding government auditors have been so deeply troubling to me.

 In the corporate world, internal auditors have made incredible strides forward in the last decade. Our relationships with audit committees have strengthened, we are gaining a seat at the table with senior management at an ever-growing number of companies and, on average, our work is more appreciated than ever before. Meanwhile, a growing number of government auditors seem to be facing daunting new challenges.…