2012

Over time, internal auditors tend to hear about a lot of things that went wrong. Unfortunately, it’s not just our clients who make mistakes — I have witnessed more than a few spectacular internal audit failures, and in too many cases the internal audits went wrong for reasons that easily could have been prevented during engagement planning. Some of the biggest blunders often seem to stem from the same few mistakes. In the hope that we can learn from each other’s mistakes, I have listed below my take on the most common of these missteps.       

1.  Not setting aside enough time to adequately plan the audit.

It’s that time of year again — the time of year when most of the important surveys about internal auditing seem to be published by way of white papers. Of course, I am particularly partial to the Pulse of the Profession (PDF) survey from The IIA’s Audit Executive Center, but several other new surveys also contain significant information for internal auditors. The only problem is that if you’re like most folks in internal auditing, there’s no way you can find time to read the results of every survey about the profession. To make life a little easier, I thought it would be helpful to summarize some of the key findings and common observations we’re seeing in the most recent round of surveys.…

As I have commented on numerous occasions, internal auditing can be a rewarding profession for those who enjoy making a difference in their organization. However, as with any profession, it is not without its challenges. New internal auditors often become frustrated when they are unable to generate an impact as quickly as they would like, or when things don’t go their way. During my career I have experienced the profession from numerous vantage points. As a young internal auditor directly out of college, I experienced the awe, excitement, and occasional frustrations that come with any new career. As I became more seasoned, the wide-eyed enthusiasm waned, but my passion for the work did not.…

Recent media coverage has focused on prosecutors who are scrutinizing a draft internal audit report from a globally recognized company in an attempt to determine whether company executives ignored or tried to conceal the report’s findings from the audit committee. The draft report flagged concern about the company’s compliance with U.S. anti-bribery laws, and whether anyone attempted to bury or hide the draft audit report. If so, prosecutors believe it could help show intent — a key element in obtaining criminal charges.

No criminal case should be “tried by blog,” and I will not focus on the specific case nor speculate about criminal wrongdoing.…

In his iconic book Sawyer’s Internal Auditing: The Practice of Modern Internal Auditing, author Lawrence Sawyer observes that, “Few sources of friction within the auditing department exceed that caused by the process of report writing. The most brilliant of analyses and the most productive of audit findings seem to be forgotten during the trauma of report writing.” I have often thought that truer words have never been written.

As a young internal auditor, I learned early on how time-consuming and frustrating it could be to write an effective audit report. No matter how well I thought I had captured the results of the audit, the audit team leader would inevitably rewrite much of what I had written.…

Like everyone else, I have been following the Olympus financial scandal with great interest. My ears perked up with the first mention in the Western media several weeks ago of potential involvement of the company’s “internal auditor.” However, I was quickly assured by internal audit colleagues in Japan that the individual mentioned was not actually the company’s internal auditor as we know the function in the West.

A recent article published by Bloomberg, titled “Olympus Clears KPMG in Fraud, Faults Internal Auditors,” once again raised the specter that internal audit colleagues in Japan were being accused of wrongdoing. Could I have been mistaken in defending the company’s internal auditors when the first accusations were leveled?…