October 2022

October 31, 2022

Internal Auditors: Put Away Your Radar Guns (and focus on traffic safety)

As my faithful blog readers know, I like use analogies to make a point to members of the internal audit profession. Over the years, I have encouraged us to courageously “sail toward the storms” confronting our organizations. I have argued that we must “push against closed doors” to gain full access to information. I have even argued that we must shed our image as “bean counters” and demonstrate our expertise on how beans are grown, harvested, and taken to market.
Over the past two decades, we have shed many of the classic stereotypes that weighted us down for so much of our storied past.…

October 17, 2022

Don’t Tell Me That!

Things Audit Committees Don’t want to Hear From Internal Audit

Over the summer, I authored a blog for AuditBoard on the 20th anniversary of the WorldCom scandal. In researching for the piece, I was reminded of the struggles Cynthia Cooper had in raising the red flag after the fraud was discovered. In her book Extraordinary Circumstances, she recounts the challenges she had in even securing a meeting with the company’s audit committee so that she could share the internal audit results. After prolonged foot-dragging by the audit committee chairman, her patience finally wore out. In a line worthy of a ​Clint Eastwood film, she sent word to the chairman that, “if he doesn’t call a meeting today, I’m going to get on the phone and call one myself.”
October 11, 2022

New Report Calls External Audit Independence The “Big Lie”

Calls for reform of external audits are nothing new. Proponents around the world are constantly advocating the need for greater independence of the individuals/firms who undertake external audits of publicly traded companies. Last week the U.S. “independent watchdog,” Project on Government Oversight (POGO), added its voice to the debate, and the report it published didn’t mince words. Even the title, Accounting’s Big Lie – And How to Fix It,” is intensely provocative.

The report was authored by David S. Hilzenrath, and he makes his case right up front:

Corporations, big accounting firms, and the federal government have been selling the public a lie.

October 4, 2022

Followup Audits Are a Waste of Time!

There’s a Better Way to Monitor Progress

During a recent seminar I was leading in Dubai, the topic of followup audits came up, the frustration in the room was palpable. Attendees were frustrated by often undertaking followup audits only to discover that nothing had been corrected!

I sympathized with my seminar students. As a young internal auditor, I was always proud of my reports, particularly the findings and recommendations. So, issuing a new audit report was cause for celebration. But nothing was more demoralizing than when I would invariably undertake the required follow-up audit only to discover that my carefully crafted recommendations or management action plans were never implemented.