July 2015

Last week’s high-profile resignations of CEO Hisao Tanaka and eight other Toshiba Corp. executives amid revelations of systemic and prolonged financial misstatements raise questions anew about Japan’s corporate governance culture.

The venerable conglomerate, which makes everything from consumer electronics to nuclear energy technology, was under fire over accounting irregularities and had established an Independent Investigation Committee. That committee’s report concluded that Toshiba overstated profits by 151.8 billion yen (US$1.2 billion) from 2008 to 2014.

The report’s findings and subsequent resignations could set back efforts to reform the Japanese corporate governance culture. Toshiba had been viewed as a pioneer in Japan in adopting an “audit committee” structure more commonly found in Western corporate governance.…

Since several key FIFA officials were indicted by the U.S. Justice Department in May, hardly a day has gone by without more bad news for the beleaguered organization. Last week, Coca-Cola became the first major FIFA sponsor to call for reforms at the sport’s governing body.

In a July 9 letter, the company urged FIFA to submit to an independent, third-party commission as the most credible way for it to approach its reform process. On July 17, McDonalds joined Coca-Cola and asserted, “We believe FIFA internal controls and compliance culture are inconsistent with expectations McDonald’s has for its business partners throughout the world.”…

This week The IIA will host its 74th International Conference in beautiful Vancouver, Canada. Over the next few days, The IIA will be unveiling several important research and thought-leadership pieces outlining opportunities and imperatives for the internal audit profession. As I have reviewed the three significant announcements we will unveil at the International Conference, it struck me that each speaks to different aspects of what amounts to a clarion call. At a time when the current risk landscape offers unprecedented opportunities for internal audit to demonstrate its value, we must show our willingness and ability to overcome all challenges.

Simply, we must step up to answer that call by reaffirming our relevance to stakeholders, proving our reliability by improving our management practices and reinvesting in ourselves as professionals.…