January 2018
I’m sure I visibly cringed when I read news accounts of criminal charges being brought against former U.S. Public Company Accounting Oversight Board (PCAOB) and KPMG employees, who are accused of using leaked PCAOB information to help the Big Four firm improve its audit results.
These charges are unproven in a court of law and all of those charged deserve the presumption of innocence at this point. However, the mere allegation that such a betrayal of ethics took place is painful, and it delivers a black eye on the accounting/auditing professions. Yet, it certainly is not without precedent. I’ve written many times that good people do bad things, and smart people do stupid things.…
In my recent book, Trusted Advisors: Key Attributes of Outstanding Internal Auditors, I explored what it takes to ascend to the level of trusted advisor in our profession. Before I explored the nine attributes that outstanding internal auditors share, I reflected on what it means to be trusted. I noted that trust is defined as “the firm belief in the reliability, truth, ability, or strength of someone or something.” For a small word, it packs a powerful punch.
Trust is one of the most underappreciated words in the internal audit “dictionary.” Without doubt, we talk about trust when considering whether we can rely on documents and assertions by management and those we audit.…
Let’s be honest. The vast majority of internal audit engagements are positive and constructive. Internal auditors and the clients whose areas of responsibility are being audited maintain a mutually respectful relationship, and the engagement results typically drive improvements or other beneficial change.
Forging strong and effective relationships within an organization is essential for the long-term effectiveness of internal auditors. Yet, try as they might, internal auditors will sometimes find themselves on the receiving end of management’s wrath.
When disgruntled executives lash out or retaliate against the internal auditors, it can feel like the empire is striking back.
From my experience, management disagreements with internal audit conclusions or recommendations are not uncommon.…
The seven-year federal prison sentence for former Volkswagen executive Oliver Schmidt has weighed on my mind since it was handed down in December. Schmidt led Volkswagen’s U.S. regulatory compliance office during the period when the German automaker was installing “defeat devices” on its vehicles designed to circumvent U.S. emissions rules.
During his allocution in federal district court, Schmidt admitted knowing of the existence of cheating software in Volkswagen’s two-liter diesel vehicles. He also acknowledged knowing VW employees were intentionally providing misleading explanations to U.S. regulators.
It is stunning to me that such admissions would come from the head of compliance for any organization, much less one from a venerable and respected global automaker.…
When a new year dawns, people tend to embrace it with optimism and confidence despite the uncertainty that lies ahead. I don’t know whether this hopeful outlook is driven by the celebration that surrounds the date or whether that optimism is what drives the merriment. Whatever the case, the New Year also pushes us to set goals and resolve to better ourselves.
My custom for the past several years is to use my first blog post of the year to set out New Year’s resolutions for the profession that highlight emerging or anticipated issues. For example, the upcoming May 2018 deadline to meet new European Union rules on personal privacy protection would meet the criterion.…