2019 - Audit Beacon

December 30, 2019

Final Reflections on Internal Audit’s Decade of Progress

In the past 10 years, many significant events have occurred that have dramatically altered the risk landscape that internal auditors must navigate. From strict new post-financial crisis regulations, to an explosion of cyber attacks, to the emergence of risks related to artificial intelligence, data ethics, and privacy, the decade has reshaped the work of internal audit.

Many of these changes will have lasting and profound impacts on how the profession serves the public interest. They offer challenges that will test our ability to provide independent assurance and support sound corporate governance. They also offer great opportunities to position internal audit as a true partner to the board and executive management.…

December 23, 2019

10 Internal Audit Thought Leaders of the Decade

These last few weeks of the year, we are seeing a variety of Top 10 lists looking back over the decade. Not to be left out, I have one to share: My list of the Top 10 internal audit thought leaders of the decade.

As I started compiling this list a few days ago, I was struck by how many men and women were vocal and instructive in advancing the practice of internal audit around the world in the 2010s. The danger in compiling a list such as this is not in who gets included, but in offending an outstanding thought leader who might be left off.…

December 16, 2019

From the Epicenter of Corporate Governance, Internal Audit Exposes Weaknesses

It is not often when a new report reveals information that is truly startling or exposes a previously unknown wrinkle to an area as well studied as corporate governance. But such was the case last week when The IIA published the American Corporate Governance Index (ACGI), in collaboration with the University of Tennessee’s Neel Corporate Governance Center.

The index assigned an unimpressive grade of C+ to corporate governance of publicly traded companies in the United States. At first, the grade may not seem upsetting or even shocking, but that assessment would be wrong. I believe it is indicative of one of the biggest threats to all organizations, not just publicly traded ones: a poor understanding of the value of strong governance.…

December 9, 2019

My Top Internal Audit Blog Posts of 2019: Self-awareness and a Little Humor

For the past three years, I have reviewed my most-popular blog posts to seek insight into what appeals most to my readers. In 2019, with more than 400,000 viewers in multiple languages, I found that the value of internal auditor self-awareness and a little self-deprecating humor went a long way.

In June, I resurrected four previously published posts that focused on internal auditors looking inward. I called it “Internal Auditor Self-awareness Month,” following the well-established “International Internal Audit Awareness Month” each May. Three of the four blog posts for June made their way onto this year’s list.

Another highly popular post was one that poked a little fun at the profession by using popular emojis to tell a little bit about the life of an internal auditor.…

November 25, 2019

IIA Takes a Principled View of Corporate Governance

For the better part of a decade, corporate scandals have emerged with embarrassing regularity. Whether involving circumventing regulations, financial misstatements, or executive misbehavior, each is a reflection of something gone terribly wrong.

Unfortunately, the natural inclination when such a scandal occurs is to seek out someone to blame. I have written often about my angst at hearing the question, “Where were the internal auditors?” as part of the blame game. I addressed that very question in a 2016 blog post.

Jumping to the conclusion that internal audit could have prevented a failure is often akin to blaming a quarterback for being sacked or a goalie for giving up a score without examining the performance of the rest of the team.…

November 18, 2019

Keeping an Eye on Culture Using New IIA Guidance

One of the most valuable services The IIA provides is developing thought leadership that offers insight and foresight for internal audit practitioners. Such content is the culmination of efforts to gather and distill the latest information about issues that influence effective risk management, strong internal controls, and good corporate governance. Supported by a global network of knowledgeable volunteers who work in the internal audit trenches, The IIA creates content that peers into the future and informs practitioners about what they need to know to protect and enhance value within their organizations.

Another vital content component is formal guidance. Practice Guides, grounded in the International Standards for the Professional Practice of Internal Auditing and other components of the International Professional Practices Framework, reflect the natural maturation of practices and processes that were once cutting edge and have subsequently evolved into best practices.…

November 12, 2019

Enforce or Enlighten? This Should Not Be a Dilemma for Internal Audit

I have lost count of the number of times in my career when I heard someone refer to internal auditors as “corporate police” who hide behind the trees with their proverbial radar gun waiting on a transgression by a company official or other employee. This perception is unfortunate, because internal auditors can be so much more effective and valued when they are not seen as the organizational “cops.”

To be sure, we have an important mission of providing assurance on the effectiveness of internal controls. Ineffective or nonexistent controls, which can be breached intentionally or unintentionally, present risks to the organization.…

November 4, 2019

The Road Ahead for Internal Audit: 5 Bold Predictions for the 2020s

Internal auditing has a long history of successfully pivoting to meet the growing and changing needs of its stakeholders. From its transition to risk-based auditing in the 1990s to its response to regulatory changes in fraud and corruption laws, financial reporting, and most recently, data privacy and culture, the profession has historically adapted to address the dynamic expectations of its key stakeholders.

As this decade comes to a close, I am looking ahead to exciting new prospects for the future. Last month, I shared some predictions about macro trends that could shape our lives and impact the organizations in which we work.…

October 28, 2019

Internal Auditing and the Public Good

Regular readers of my blog understand the emphasis I place on internal audit’s role in helping organizations achieve their objectives. It is integral to the Definition of Internal Auditing and is at the core of what we do as professionals. No matter where we perform our duty as internal auditors, serving the organization must be ingrained in our DNA.

There is a large part of the internal audit community where this is particularly and peculiarly so: the public sector. There are unique challenges for public-sector auditors that relate to serving organizations that, in turn, serve the public and public good. Among the most selfless men and women in our profession are those in public service.…

October 21, 2019

When Boards Are Surprised, Who’s at Fault?

The number of shocking corporate scandals that have damaged major corporations reads like part of a top 10 list of news events from the past decade — Toshiba’s accounting debacle, Volkswagen’s dieselgate, Wells Fargo’s fake accounts, Carillion’s collapse, Nissan’s CEO salary fiasco.

All proponents of good governance — from investors to regulators to compliance and risk managers to providers of independent assurance — should be deeply troubled by these high-profile scandals. What’s worse, these examples of governance failures have a common and troubling subplot: In every case, the boards of these mature and highly sophisticated corporations were largely in the dark about the extent of significant risk management flaws that eroded shareholder value.…