2022

August 10, 2022

You Don’t Have to Be a Clown to Audit the Circus

My friend and fellow blogger Norman Marks reminded us recently of an enduring challenge that many internal auditors face. In a blog post titled “You Can’t Audit This!”, Norman explores the all-too-frequent standoff between internal auditors and management about whether we have the skills and expertise to audit their areas of responsibility. There may be times when that is a legitimate concern, but it is often used more to delay or thwart an audit. Norman’s writings brought a smile to my face as I recalled instances in my career when I had to deal with “you can’t audit this.”

When push-back occurs about our ability to conduct an audit, it is usually rooted in the perception that we lack knowledge of “the business,” and that we should stick to “bean counting.”…

August 7, 2022

The Big-Impact Audit: It’s About More Than Money!

In a recent blog post, I explored the reality that most internal audit departments are actually small, with a staff of five or fewer full-time auditors. But just because a department is small doesn’t mean it can’t generate a big impact. That said, a “big impact” audit can mean different things to different folks, so I thought it would be helpful to discuss here what I believe one actually looks like.

Whether it’s in internal auditing or in life in general, we all aspire to make a difference. We want a feeling of accomplishment that comes with knowing we have changed the world, if only in a small way.…

August 1, 2022

An Inconvenient Truth: Most Internal Audit Departments Are Small

When I first became a CAE almost 30 years ago, I inherited an internal audit department with very limited resources, especially considering the size of the enterprise. With five internal auditors plus myself, we were challenged to provide quality internal audit coverage for a $10 billion entity. I knew I had my work cut out for me, and we wouldn’t get more resources unless we demonstrated greater value than the department had in the past.

I chronicled that journey in one of my books, The Speed of Risk: Lessons Learned on the Audit Trail 2nd Edition. From that first assignment as a CAE, I would go on to lead internal audit teams of more than 1,000.…

July 25, 2022

Are Internal Auditors Influenced by ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​’Beauty Bias?’

Shortly after I became a chief audit executive, a member of my team identified a fraud in the organization. We all knew the suspect, and there was a lot of conversation in the office about what had been found. I remember someone saying, “I would have never suspected him! He doesn’t look like someone who would break the law.” That comment greatly annoyed me, and I called out the person, reminding them that we must be objective in our work. Appearance should never influence us.

I often wondered if judging the honesty of people based simply on appearance was a widespread problem in our profession.…

July 19, 2022

New AuditBoard Report Offers Rare Glimpse Into Internal Audit Mid-year Progress and Priorities

Regular readers of my blogs will know that I frequently share highlights from new research or thought leadership that sheds light on the trends and outlook for internal audit. Such reports from the ECIIA, Protiviti, IIA Global, and others tend to be published near the end of the year or early in the new year. They provide valuable insight into the results from the year that’s ending or the outlook for the year ahead.

Given the dynamic nature of risks and corresponding priorities that we are experiencing in the 2020s, I believe the profession needs more timely insights to enable benchmarking and course corrections throughout the year.
July 11, 2022

Internal Audit and the Endangered Art of Tact and Diplomacy​​

We are living in a world where frustration and confrontation borne out of resentment, mistrust and anger have become commonplace. It feels like the days are gone when people could agreeably disagree. I fear that civility is endangered behavior, and the art of tact and diplomacy is no longer valued when communicating. Things are not as bad in the workplace as they are in society in general, but some organizational cultures are beginning to emulate society. As internal auditors, we must remember that to influence positive change, we must bring constructive conversation to bear. We must never lose sight of the art of tact and diplomacy when communicating.…

July 5, 2022

Winning Over Skeptical Internal Audit Clients: 5 Strategies To Remember

In my recent blogs, I have been focusing on the basics of effective client service by internal auditors. I even wrote an article for AuditBoard on 6 ways internal auditors can apply client service concepts in executing their mission. As I have raised awareness on the topic of client service, I have received many inquiries seeking advice on how to deal with “challenging clients” and strained client relationships. Some have suggested that no matter how hard they try, they still face resentment and a genuine lack of cooperation when engaging those whose areas they are auditing. As I have said over the years, there is no magic formula for building and sustaining effective relationships.…

June 30, 2022

Courageous Internal Auditors Don’t Wait For a Choir

This month marks the 20th anniversary of the internal audit at WorldCom that shined the light on a $3.8 billion financial reporting fraud. My recent article for AuditBoard revisited what I called “arguably the most consequential internal audit ever undertaken.” The audit not only contributed to the demise of WorldCom, but its results contributed in many ways to the swift US Senate passage of the Sarbanes Oxley Act barely three weeks later.

As I observed in my WorldCom article, the audit wasn’t just the work of technically outstanding internal audit professionals (which it certainly was). More importantly, it was the direct product of courageous leadership by WorldCom’s CAE, Cynthia Cooper.…

June 28, 2022

The First Half of 2022 Has Been Risk-Induced Bedlam

When a new year dawned almost 6 months ago, the world had every right to expect calmer seas ahead. After all, we had collectively lived through two years of COVID-induced disruption, the likes of which the world had not witnessed in decades. Instead of a calmer more predictable landscape, 2022 has thus far presented nothing short of risk-induced bedlam!

The word bedlam is defined as a “state of uproar and confusion,” and I cannot think of a more apt description of the first half of 2022. Consider for a moment all of the risks that have come to fruition thus far this year that weren’t widely anticipated:

  • The COVID Omicron Variant: As we closed the books on 2021, there was a sense of relief that the worst of COVID was behind.
June 22, 2022

Everybody Loves a Government Watchdog … Until It Barks

It’s not clear when the label of watchdog was first attached to government auditors, but it has become a frequently used term for these hard-working public servants over the decades.

In many jurisdictions around the world, a government auditor’s mission is to ferret out waste, abuse, and corruption in government, and there is generally glowing praise for these watchdogs. However, in far too many instances, when a government auditor has to report that there is inefficiency, ineffectiveness, fraud, waste, or mismanagement, suddenly not everyone is happy to have them around.

Indeed, the love affair with watchdogs at all levels of government, as well as their capable corporate counterparts, has not been without a few spats.…