January 2023

January 31, 2023

Recent Advice on Hiring Internal Auditor’s You Can ‘Trust’ Is Misdirected

I frequently peruse various news feeds for articles on internal audit. Some of those written by non-internal auditors are quite good. Some are quite bad. And there are some that offer bad information or advice that I cannot resist calling out. One such article appeared recently on the noted thought-leadership website JDSupra.com.

To be fair, the article, titled SEC Compliance Internal Audit Tips: 4 Things You Should Know, appears well-intended and provides some useful advice for executives of regulated securities firms. For example, the author advises securities firm executives to “take prompt action” on information provided in internal audit reports.…

January 24, 2023

Do Performance Bonuses Impair Internal Auditors’ Independence and Objectivity?

Internal audit functions are essential to effective risk management, control and governance. And vital to that effectiveness is independence of the function and objectivity of its internal auditors.

Independence and objectivity are so important that they respectively comprise the first two IIA Standards. Independence, according to the Standards, “is the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner.” Objectivity is an “unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they believe in their work product and that no quality compromises are made.”

January 16, 2023

Are Internal Auditors to Blame When Boards Are in the Dark?

Over the years, I have spoken to countless board members about their roles and expectations for internal auditors. Most are complimentary of the internal auditors in the organizations they oversee. They often refer to the auditors as their “eyes and ears,” and stress how much they depend on the internal audit department.

But there is one expectation by board members that causes me concern: They often emphasize that they look to internal auditors to help them avoid surprises.

I can’t help but cringe when I hear that, especially in an era of risks that seem to emerge out of thin air and catch everyone by surprise.…

January 9, 2023

Follow the Leaders in 2023

In my last blog of 2022, I recognized 12 outstanding thought leaders from around the world as A Dozen Who Made a Difference over the past year. These men and women elevated internal audit’s full potential through a full body of thought leadership that included writing, speaking and use of social media.

The annual Beacon Awards prompt a great deal of interest, and I am often asked for a list of individuals who are active on social media. Given the amount of time I devote to this space, I obviously have developed an extensive lineup of people and organizations I follow.…

January 2, 2023

Six Tips for Internal Auditors When Delivering “Bad News”

In a recent blog, I observed that in many companies management and boards do not welcome – or even permit critical scrutiny by internal auditors. Fortunately, that isn’t the norm. From my experience, a majority of organizations do recognize the importance of internal audit, and value the role it plays. But that does not mean management and boards are always happy to hear what we have to say. Being the bearer of bad news can test even the best relationships.

Every profession has its ups and downs, and internal audit is certainly no exception. In fact, some of the most awkward and, yes, even painful moments can occur when we need to deliver bad news to those whose areas of responsibility we just audited.…