As part of my ongoing engagement in social media, I routinely monitor the media for references to stories involving “internal audit.” The past few weeks it seems that the media has been overrun with headlines involving internal audits. Normally, I would be encouraged with such coverage. However, where recent headlines have been concerned, I suspect the “internal audits” weren’t actually internal audits at all. I believe this happens more often than many people realize, sometimes showing up in the media when internal reports generated by management or “second line-of-defense” oversight functions are mistakenly depicted as “internal audits.”
The distinction is significant: When an investigation is performed by an entity other than by internal auditors, it is important to know whether it was done independently and objectively and in accordance with professional standards.…
A few months ago, I wrote about Five Things the Audit Committee Won’t Tell Internal Auditors. Based upon feedback I received from around the world, it appears that many chief audit executives shared my perspectives. While I continue to believe we need to work on communications with our audit committees, that is not the only area in which we face communication challenges. Internal auditors typically have a strong working relationship with management, but managers also don’t always tell us everything we need to hear — and know.
When the topic is fraud management or internal controls, most management executives will speak up without hesitation.…
Every few years, a game-changing event materializes that generates a significant impact on the internal audit profession. Take, for example, the U.S. Sarbanes-Oxley Act of 2002 and similar legislation around the world enacted more than a decade ago. Usually, we immediately recognize the importance of such an event, the risks it creates for our organization, and how it will impact our internal audit functions.
When Sarbanes-Oxley became the “Next Big Thing” in internal auditing, almost all of us anticipated the call for immediate action. We sharpened our pencils, headed off for training, and renewed our focus on assessing the effectiveness of financial controls.…
Internal auditors tend to be very good at most managerial tasks. We understand the importance of budgets and schedules, and we believe in developing clear policies and procedures. We undertake regular planning activities, we require periodic performance evaluations, and we institute strict quality-control mechanisms that help ensure the value of our work.
Internal audit training programs are typically designed to teach each of these tasks, and most of us learn these lessons well. But even in larger internal audit departments with extensive training and development programs, it’s not unusual to find that, in one area, we sometimes pay scant attention: and that’s to leadership skills.…