2016

There has been no shortage recently of corporate scandals born from ineffective corporate governance, poor risk management, and toxic cultures. In each case, I inevitably hear the question, “Where was internal audit?” There is never a simple answer to that question. As with all things as complex as modern business, there is rarely an easy explanation when things go horribly awry.

In each instance, media reports, regulatory filings, or company statements — even the occasional congressional hearing — give us a glimpse into a piece of what may have led the organization astray. But to suggest a failure by i​nternal audit is a conclusion that should be drawn only when the facts are known.…

To: The newly appointed audit committee member

From: IIA President and CEO Richard F. Chambers

Re: Preparing for your pending role on the audit committee

Congratulations on your appointment to the audit committee!

Your new position marks a professional milestone reflecting that you are a seasoned executive whose business and financial acumen places you among the elite members of your board. However, before you sit down at your first committee meeting, there are a number of things you should know and consider about the role you’ve taken on.  

The role of the audit committee and its value to the organization have dramatically increased in importance in the past decade.…

During a recent wide-ranging interview with a well-known editor of a global business journal, the issue of CAEs dealing with unethical corporate behavior came up. Part of the discussion included the topic of CAEs having the courage to confront the very people who sign their paychecks.

At one point she asked a simple yet compelling question, “Is the cost of courage unemployment?”

The vast majority of CAEs will successfully navigate their careers without having to deploy extraordinary courage in the face of illegal or unethical behavior by their companies or executives.

However, from Cynthia Cooper at WorldCom to Michael Woodford at Olympus, there are a number of examples of courageous corporate executives who put their careers on the line to speak out against fraud and criminal behavior.…

There are few things that capture the public’s attention faster than widespread flight delays. Ask Delta Air Lines and British Airways. This summer the two venerable carriers were tested when unexpected technical glitches grounded flights and delayed customer check ins.

In Delta’s case, 2,300 flights were cancelled over three days in early August when equipment failures and a subsequent power outage darkened computer terminals at its Atlanta headquarters. All Delta flights were grounded for a time until power was restored.

An IT glitch was blamed for British Airways’ kiosk check-in systems shutting down worldwide over part of the long U.S. Labor Day weekend.…

There are few things that capture the public’s attention faster than widespread flight delays. Ask Delta Air Lines and British Airways. This summer the two venerable carriers were tested when unexpected technical glitches grounded flights and delayed customer check ins.

In Delta’s case, 2,300 flights were cancelled over three days in early August when equipment failures and a subsequent power outage darkened computer terminals at its Atlanta headquarters. All Delta flights were grounded for a time until power was restored.

An IT glitch was blamed for British Airways’ kiosk check-in systems shutting down worldwide over part of the long U.S. Labor Day weekend.…

In a disappointing, but not surprising move, the Houston Independent School District failed to renew the contract of its chief auditor last week. Richard Patton, whose two-year tenure at the school district was marked by success in turning around a struggling internal audit function, fell victim to an all-too-common danger for conscientious practitioners.

Simply put, Patton was let go for doing his job.

Patton was suspended by the district in March for unspecified allegations of misconduct and was allowed to return to work in a diminished capacity in August. Despite requests by Patton’s attorney, the district has refused to make public the investigation, which cost the district a reported $17,000, so the reasons for his suspension remain unclear.…

In a recent blog, I offered 7 Deadly Internal Audit Sins that have the potential to ruin an otherwise bright internal audit career. This week, I’d like to focus on characteristics that are essential to a successful internal audit career. Let’s call these the 7 Internal Audit Virtues.

At first glance, these may seem obvious, but it is important to remind ourselves that these core actions should be instinctive to internal auditors. The challenges of modern internal auditing can create pressure on practitioners to act quickly and decisively. While we must be willing and able to meet those growing demands, we must remain vigilant that those pressures don’t erode or overwhelm our commitment to remain true to these fundamental virtues.…

A situation is playing out in Houston that should interest anyone who is part of or follows the internal audit profession. Its repercussions are far reaching for two important reasons. The first involves the challenges internal auditors face with intimidation by their employers, and the second involves how far practitioners can go in responding to such tactics while maintaining objectivity.

This case involves the chief audit executive (CAE) of the Houston Independent School District who took over a poorly performing function and quickly restored it to meet IIA quality assurance and improvement standards, according to media reports. In the course of doing his job – and quite well by most accounts – he apparently ruffled the feathers of a number of elected officials who oversaw the function.…

A situation is playing out in Houston that should interest anyone who is part of or follows the internal audit profession. Its repercussions are far reaching for two important reasons. The first involves the challenges internal auditors face with intimidation by their employers, and the second involves how far practitioners can go in responding to such tactics while maintaining objectivity.

This case involves the chief audit executive (CAE) of the Houston Independent School District who took over a poorly performing function and quickly restored it to meet IIA quality assurance and improvement standards, according to media reports. In the course of doing his job – and quite well by most accounts – he apparently ruffled the feathers of a number of elected officials who oversaw the function.…

The focus on culture and its impact on the organization is increasingly on the radars of regulators and investors. A series of spectacular scandals involving well-known brands in the past 18 months is sparking closer examination of not just the mechanics of the breakdowns, but the atmosphere in which they occurred.

In previous blogs, I shared my observations on how breakdowns of good governance contributed to these scandals, including at FIFA, Toshiba, and Volkswagen. It’s time to take a look at organizational culture’s impact on what should be internal auditing’s primary focus — governance, risk, and control (GRC).

There are many variations on the definition of GRC.…