November 2017

November 27, 2017

Discrimination and Sexual Harassment: Risks Too Big to Overlook

Regular readers of this blog know its focus is to provide internal audit practitioners insight and advice on doing their jobs and ultimately helping their organizations reach their goals. This is why my most-read posts often involve straightforward and practical advice and observations about the daily work of internal auditors. Over the years, posts that include lists of specific recommended actions have proven to be some of the most popular.

Yet, I find it is also necessary to comment occasionally on high-profile news events, adding important context to how risks associated with these events could impact organizations and, therefore, internal audit.…

November 20, 2017

Internal Auditors Need Foresight to Provide Foresight

I frequently observe that the internal audit profession is on a journey — from hindsight to insight to foresight. Following its origins more than a century ago, internal audit focused primarily on hindsight. Our predecessors assessed what happened the week, month, or even year before. They provided assurance of the effectiveness of (primary financial) controls from the past.

Eventually, the profession began to focus too on the “here and now,” providing assurance on the effectiveness of (often operational) controls in the present. This assurance, coupled with internal auditors’ perspective on risks facing their organizations, provided valuable insight for management and the board.…

November 13, 2017

Courage Is Easy When There’s Nothing on the Line

Courage is often discussed as a necessary trait for internal auditors, and over the decades countless practitioners have put their livelihoods on the line to bring wrongdoing to light. Like many others, I have long believed that Cynthia Cooper, the former vice president of internal audit at WorldCom, is the model of courage in our profession.

Cooper’s story is well known within internal audit and accounting circles, and she is rightly praised and lauded for having the courage to stand up in the face of enormous pressure and adversity to unearth the $3.8 billion fraud.

In her book, Extraordinary Circumstances: The Journey of a Corporate Whistleblower, Cooper counsels internal auditors to “find your courage.”…

November 6, 2017

Corporate Transparency Should Shine a Light on Internal Auditing

Data in a recently published report from our colleagues at the Center for Audit Quality (CAQ) reflect an encouraging trend. Publicly traded companies are sharing more information about how their audit committees interact with the companies’ external auditors.

One of the more telling findings in the Audit Committee Transparency Barometer is the surprising growth in the number of companies willing to share details about how their audit committees evaluate the work external auditors do. The CAQ report finds the number of S&P 500 organizations reporting the evaluation criteria has grown from 8 percent in 2014 to 38 percent in 2017.

The CAQ report isn’t the only one that shows the move toward more transparency:

  • Deloitte’s Center for Board Effectiveness reviewed proxies for the S&P 100 and found disclosures in three key areas — the number of financial experts on the audit committee, the audit committee’s role in reviewing certain external communications, and the audit committee’s role in approving audit engagement fees grew by more than 10 percent in 2016.