June 2015

June 29, 2015

Internal Audit Should Never “Belong” to the CFO

One of the most revealing statistics to come out of a recent IIA Audit Executive Center survey is the fact that internal audit functions that work administratively for the chief financial officer (CFO) dedicate in excess of 60 percent more resources to U.S. Sarbanes-Oxley Act of 2002 compliance than their counterparts in the profession who report administratively to other executives. Are Sar​​banes-Oxley risks 60 percent greater in companies whose CFOs have oversight of internal audit? I don’t think so. Rather, I believe that many CFOs who have oversight of internal audit use it to address handiwork that otherwise would fall on other CFO functions.…

June 22, 2015

Internal Audit’s Role in the Too-big-to-fail Debate

The July 1 deadline for some of the United States’ largest banking institutions to submit “living wills” for review is looming, and there will be a lot of ink and internet space invested in predicting whether those banks will pass regulatory muster and what the fallout will be for those that do not.

The “living wills,” mandated by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, require the periodic submission of resolution plans to the Federal Reserve and the Federal Deposit Insurance Corporation. Each plan must describe the company’s strategy for rapid and orderly resolution in the event of material financial distress or failure of the company, and include both public and confidential sections.…

June 15, 2015

No Internal Audit Function? Investors Beware!

According to a recent Gallup Poll, about 55 percent of Americans report they invest in the stock market, which is consistent with historical trends. The statistics vary in other countries, but the fact is that hundreds of millions of individuals around the world, directly or indirectly, are risking their retirement income and financial well-being based on how well the companies they invest in are run.

As more investors seek to benefit from a growing marketplace, they should be cautious when deciding which companies are worthy of their hard-earned dollars. Not only should they understand an organization’s business model and the risks facing the economy, industry, and company, but they should also understand how well a company is managed.…

June 8, 2015

Everybody Loves a Watchdog … Until It Barks

It’s not clear when the label of watchdog was first attached to the U.S. federal Inspectors General, but it has become a welcomed term for these hard-working public servants and their sta​ffs over the nearly 37 years since the passage of the Inspector General Act of 1978.

It is commonly accepted that the IGs’ mission to ferret out waste, abuse, and corruption in government is important, and there is generally glowing praise for these watchdogs. The same is often expected of government audit organizations around the world. However, in far too many instances, when one of these watchdogs has to report that there is inefficiency, ineffectiveness, fraud, waste, or mismanagement, suddenly not everyone is happy to have them around.…

June 1, 2015

The FIFA Scandal: Five Lessons for Internal Audit

The global soccer community was rocked this past week when the U.S. Department of Justice (DOJ) announced charges and arrests for “rampant, systemic, and deep-rooted” corruption by high-ranking members of FIFA, the sport’s global governing body. Using the U.S. Foreign Corrupt Practices Act (FCPA) as its legal hammer, the DOJ outlined in its 47-count indictment a disturbing history of alleged bribes and racketeering by top FIFA officials dating back as far as two decades. It is evident that more troubles lie ahead for the global soccer body, as Swiss officials have announced that they are also investigating potential improprieties.

The relevance of the events of the past week are obvious to our profession, but it goes well beyond an acknowledgement of internal audit’s role in providing assurance on anti-bribery and anti-corruption programs and its role in detecting and deterring fraud and corruption.…