July 2013

One of the things I enjoy most about social media is its ability to stimulate passionate and seemingly endless debates over the most insignificant topics. For many, these debates take place on Facebook or Twitter. For internal auditors, LinkedIn tends to be the platform of choice. For the past few days, internal auditors and others have been chewing on one particular LinkedIn post like a “dog with a bone.”

It all started about two weeks ago with the following post to The IIA’s Official Global Group:

“Should the internal audit profession be the preserve of chartered accountants only? Or should it be opened up to people with diverse professional backgrounds?”…

One of the most important things internal auditors can do to meet stakeholder expectations is to ensure internal audit priorities align with those of the board and executive management. Risks that “keep our stakeholders up at night” also should be of concern to us.

If that sounds like common sense, consider that Thomson Reuters’ survey of internal auditors, The State of Internal Audit 2013 (PDF), found that while internal auditors are focusing on assurance of internal processes and IT risk, boards are more interested in governance, strategy, and strategic-level risk management.

If your internal audit function is stuck in the past, you risk becoming irrelevant or missing the real risks to your organization.…

Recent risk-management failures in Washington, D.C., have reflected what happens when an organization with so many risks associated with the achievement of its mission fails to anticipate and manage those issues effectively.

The consequences can be dire. Loss of public confidence and widespread reputational damage can be devastating at any level of government, but especially when it occurs on a national or international scale.

Government auditors play a central role in fostering trust. Without them, citizens would lack credible insight into the soundness of the many inner workings of government. The professionals who audit federal, state, and local governments or other public entities must cope daily with career-threatening political risks from which private-sector internal auditors are largely immune.…

Stakeholder support is vital to internal auditing’s ability to add value and contribute to the organizations we serve. When chief audit executives and their staff are not meeting stakeholder expectations, there are typically signs or early indications that the support we might have enjoyed in the past is starting to slip.

I saw this scenario play out many times during my years leading internal audit for the U.S. Army. I have likewise seen it occur in the corporate sector. Like many of my colleagues, I’ve also taken over internal audit functions where my predecessor had lost that connection with stakeholders. So I’ve seen the signs.…