2020 - Page 2 of 6 - Audit Beacon

October 4, 2020

Europe’s Internal Auditors Are Already Identifying the Risks for 2021

As we enter the fourth quarter of a historically difficult and disruptive year, internal audit leaders around the world are looking to next year with some degree of trepidation. If the COVID-19 pandemic has taught us anything, it is that new risks can emerge at lightning speed and have profound impacts on our organizations and lives.

Finding some perspective on what the risk landscape will look like in 2021 poses a challenge, particularly because the pandemic continues to rage in many areas of the world, and there are continuing warnings about a second and possibly third wave of the deadly virus.…

September 28, 2020

Internal Auditors: Be Trusting But Skeptical

From the early days of my career, I was told that internal auditors should not simply accept what we are told, that we should always take the extra steps to double-check the information. En route to the answers, it was important to build reliable sources by creating open, productive working relationships. In this way, we could establish trust. But we also should ensure that trust was earned.

Trust but verify.

The Anti-Fraud Collaboration, of which The IIA is one of four sponsoring organizations, is releasing new thought leadership that cuts to the core of the notion “trust but verify.” In examining methods for detecting and deterring financial statement fraud — or, for that matter, any type of fraud — the paper focuses on the importance of practicing skepticism, or refusing to accept information and practices we observe with blind faith.…

September 20, 2020

We Are Here to Help You — This Time We (Really) Mean It

“We are here to help you!” That phrase seems so innocent, but those six little words are sometimes referred to as “the biggest lie of the internal audit profession.” As the old joke continues, the second biggest lie is management’s response: “We are glad you are here!”

I have written several blogs this year about how internal audit should be helping their organizations navigate the COVID-19 pandemic. Surveys continue to indicate that internal audit’s support is being genuinely welcomed in a great many organizations. As management fends off the threats from the COVID-induced health and economic crises, they often welcome help from any trusted source available.…

September 13, 2020

Internal Audit, COVID-19 Risks, and the Year Ahead

Readers of my blog know that, in recent years, I have constantly emphasized the importance of internal auditors anticipating future risks for our organizations. As I observed in a 2018 blog post:

As a profession, internal auditors have cultivated a long and respected legacy as purveyors of hindsight. Almost all of us are adept at looking at last year’s data and telling management where past mistakes were made. While hindsight is a necessary part of internal auditing, 20/20 hindsight is one of our least valuable skills. Often, our clients are already aware of past mistakes.

With the advent of operational auditing and, ultimately, the introduction of consulting/advice into our portfolio of services, we also became purveyors of insight.…

September 6, 2020

Curse of the Happy Workpapers

As a young internal auditor, I took very seriously the painstaking art of documenting the results of my internal audit work in workpapers. I believed that well-organized, comprehensive workpapers were critical to demonstrating the quality of my efforts, and were the basis for the audit report I would write at the conclusion of the audit.

I understood that the workpapers needed to include documentation of evidence I examined, and that the evidence needed to be relevant, reliable, sufficient, and useful. I adapted to the culture of the profession of the time. And I came to believe that internal audit workpapers were good, and more workpapers were better.…

August 31, 2020

When Lines to Internal Audit Fall Silent, It’s Time to Reach Out

As the COVID-19 pandemic extends further into the second half of the year, many of us have fallen into a grudging acceptance that disruptions to our home and work routines, once viewed as temporary, could continue indefinitely. It is safe to say that reactions to the global health and economic crisis have unsettled lifestyles, stretched resources, and tested patience and process.

Efforts to manage health and business risks associated with the pandemic have seen varying levels of success. There are differing opinions as to which impacts may permanently change our lives and which are temporary and will disappear as the deadly virus fades in the wake of a vaccine.…

August 24, 2020

Disruption Brings More Calls to Action for Internal Audit

This time of year is typically slow for the release of thought leadership in the internal audit profession. The IIA, internal audit service providers, technology firms, and others normally unleash a wealth of white papers and reports earlier in the year, then there’s a lull before a bevy of fresh new ideas and perspectives once again flows. But 2020 has been anything but typical, with insightful and topical content not ebbing as we navigated the pandemic from our home offices.

At least three publications released in just the past few weeks warrant every internal auditor’s perusal. My old colleagues at PwC published a timeless report in July titled Engaging With the Audit Committee: Five Ways for Chief Audit Executives to Stand Out.…

August 17, 2020

For Internal Audit, Success Boils Down to Five A’s

Almost every week for the past 11 years, I have posted blogs about various aspects of internal auditing. I have covered hundreds of topics and examined dozens of issues confronting the profession, from independence and courage in the face of fire to building stakeholder relationships and understanding the root cause of high-profile scandals. In each post, I hoped to impart some insight and perspective on the roles and responsibilities of internal audit.

As you can imagine, over such an extended period, I saw trends — and priorities — come and go. I marveled at the evolution of the profession, and I discovered some clear truths:

Internal audit is a key component of sound corporate governance.

…

August 10, 2020

Strong and Effective Internal Audit Is Essential to Keeping Companies out of Trouble

Hefty fines levied by U.S. regulators last week in two high-profile cases provide new examples of how ineffective controls can lead to significant problems. One instance was driven by inadequacies in managing cloud computing risks, the other resulted from conspicuous and deliberate rejection of sound governance practices. In one instance, internal audit was part of the problem. In the other, it was a victim.

The best known of the two cases involved Capital One, the Virginia-based bank holding company known for its catchy “What’s in your wallet?” advertising campaign. The bank was hit with an $80 million civil fine from the U.S.…

August 3, 2020

5 Things Internal Audit Must Tell the Audit Committee Now!

As we continue to navigate the treacherous risk landscape that includes an ongoing global pandemic, much is being said and written about whether internal auditors are stepping up for their organizations. I am certain we are contributing value during this time, but I also know it may not always be evident — that’s because many internal auditors are not comfortable extolling their contributions in audit committee meetings.

No relationship for a chief audit executive (CAE) has been transformed more in the 21^st century than that with the audit committee. According to The IIA’s Audit Executive Center, 90 percent of North American internal audit departments in publicly traded companies report functionally to the audit committee (and 80 percent overall).…