2023 - Page 2 of 5 - Audit Beacon

September 14, 2023

A “PESTLE” Analysis: 6 Steps For Identifying Emerging Risks

In a recent blog for AuditBoard, I observed that the world has seemingly entered “a state of persistent crisis, with no sense of how we’ll escape.” Some call it a “permacrisis,” an “extended period of instability and insecurity.” For internal auditors and risk managers, a permacrisis means we can no longer simply assess and monitor the clear-and-present risks facing our organizations. We must constantly scan the horizon for risks that seem to emerge out of thin air.

Such emerging risks are potential threats or challenges that may be evolving or are apparent but not yet fully materialized or widely recognized. They have the potential to impact businesses, industries, governments, and society as a whole.…

September 12, 2023

For Clients, Drive-by Audits Feel Like a “Hit-and-Run”

During a recent lecture on internal audit’s enduring timeliness challenge, I was once again preaching of the dangers of audit engagements that take too long. A survey of participants disclosed that many took 60-90 days to finish a typical engagement. Most agreed that lengthy audits yield less value than those where the results can be delivered quickly.

But one seminar participant shared a different view. He was quick to point out that assurance engagements conducted too quickly are also fraught with danger – especially if the auditors don’t focus on the real risks. I agreed and have written about the dangers of what I call “drive-by audits” in the past.…

September 7, 2023

Are Internal Auditors as Efficient as They Expect Others to Be?

Like many chief audit executives, when I was leading an internal audit function, I periodically found my company facing financial pressures. Inevitably, management and/or the board would ask the question “can internal audit’s resources be reduced as part of corporate cost cutting?” Whenever that happened, I used the occasion as a call to action to do two things: (1) redouble my efforts to communicate the value we bring to the organization, and (2) examine the efficiency and effectiveness of the internal audit operation itself.

The second initiative was important, because if reductions in resources were to be levied, I needed to mitigate the impact on the value we delivered by ensuring we were as efficient as we would expect to find other operating units in the organization.…

August 28, 2023

Business Acumen: The Differentiator for Internal Auditors

“I just wish the internal auditors understood the business better!” I can’t count the number of times I have heard this lament from company executives during my years in the profession. While they may have been speaking about their specific business, they were often alluding to what they viewed as a lack of strong business acumen in general. While I believe a great many internal auditors do bring sound business acumen to their roles, we can all be better.

When I set out to write my fourth book, Agents of Change: Internal Auditors in an Era of Disruption, I asked chief audit executives around the world to identify the traits that internal audit change agents share in common.…

August 21, 2023

Gaslighting the Internal Auditors Should Never Succeed

The term “gaslighting” has enjoyed a resurgence in popularity in recent years. Its origins date back to a British play later made into a film during the 1930s. Titled “Gas Light,” the plot revolved around a husband’s psychological and emotional manipulation of his spouse, leading her to question her sanity. The manipulation involves his deliberate alteration of a gas lamp’s brightness within their residence.

In its modern-day use, gaslighting is a manipulative tactic in which one person tries to control another by making them doubt their own perceptions, memory or even sanity. It usually involves denying or distorting reality, causing the victim to question their beliefs and feel confused or uncertain.…

August 14, 2023

Sky-high CEO Pay Can Create Significant Risks

There has been a surge in news regarding CEO compensation. Always a topic of intense interest, CEO pay can become especially contentious during periods of economic slowdown or for companies/industries under unique stress. Sometimes, CEOs attract scrutiny upon themselves: The chief executive of an American media giant, criticizing pay demands by striking writers and actors, drew intense backlash when it was revealed that his annual pay tops $27 million.

Questions about CEO compensation are not limited to specific companies or industries. A recent report noted that the median pay of CEOs at S&P 500 companies was about $14.5 million in 2022.…

August 7, 2023

Four Key Risks Dominate the Outlook for the Remainder of 2023

I am often asked for the most common advice I offer to internal auditors seeking to deliver greater value for their organizations. I offer 3 simple words in response: “follow the risks!”

Before we can follow the risks, however, we must be risk aware. In the era of permacrisis, maintaining risk awareness is becoming ever more critical. For that reason, I am always on the lookout for predictions or forecasts of emerging risks or those that lie ahead. So, when the World Economic Forum (WEF) issued it recent Chief Risk Officers’ Outlook, it immediately caught my attention. The WEF report is based on surveys and interviews with chief risk officers (CROs) from leading public and private sector organizations from around the world.…

August 2, 2023

Professional Resilience Means Never Being Defined by Our Failures

My blogs normally focus on topics of direct interest to internal auditors. However, I often receive notes from readers outside the profession who can relate to the messages I share. The fact is, we all share common experiences – particularly when it comes to our careers. Regardless of the profession you are pursuing, there will be highs and lows. In my own career, I experienced periods of extraordinary success, often followed by a disappointment or two.

We’ve all been there. We thought we were the leading candidate for an executive assignment with a high-profile company, only to learn that the selection panel went in a different direction.…

July 23, 2023

Internal Auditors Serve the Public Interest – Even When the Public Doesn’t See Their Work

Seven years ago, I had the distinct privilege of joining several IIA colleagues on the podium of the New York Stock Exchange (NYSE) to ring the opening bell. The experience was one of the highlights of my 12 years as The IIA’s CEO. It’s a memory I cherish for many reasons, not the least of which was the NYSE’s acknowledgement of the important role internal auditors play in fostering trust in capital markets around the world.

I suspect some of you might be scratching your head asking, “How did he make that leap?” Frankly, it’s not a leap at all. In comments made to us just before the ceremony, NYSE officials said as much.…

July 17, 2023

Shout-outs in Audit Reports Can be as Powerful as Findings

I had a conversation recently with several attendees at The IIA’s International Conference about including positive commentary in internal audit reports. Some were in favor of identifying leading practices they observed related to strong risk management and internal controls in audit reports. Others were not so sure. They argued that we really aren’t there to be cheerleaders, and make management feel good about “just doing their job.” I was was of the opinion that a “balanced report” should acknowledge what went well. But, not everyone in the conversation was convinced. I wasn’t surprised by the lack of consensus, for this has long been a point of contention within the profession.…

July 9, 2023

Is a Crucial Internal Audit Skill in Decline?

For more than a decade, chief audit executives have consistently rated critical thinking as one of the top three skills sought when recruiting internal audit staff. In fact, critical thinking often ranks higher than accounting, risk management or even technology skills.

CAEs see critical thinking as the prized attribute that can separate good internal auditors from great ones. Even ChatGPT rated critical thinking as the most valuable skill in my recent simulated interview on internal audit. As ChatGPT observed:

“While internal auditors require a range of skills to excel in their roles, one skill stands out as particularly crucial: critical thinking.…

July 5, 2023

Internal Auditors: You Can’t Be a Change Agent if They Don’t Know What You Do

For the last five years, I have been encouraging internal auditors to become more assertive and adept in “telling their story.” Telling our story is simply another way of creating awareness among our stakeholders who may not appreciate the value we create, or our potential to foster organizational success. As I noted in one of my first blogs of the 2020’s:

Successfully showing our value is more than what we say. Indeed, it is all about delivering on that promised value. I’ve written extensively on how internal audit adds value, including dedicating chapters in two of my books to the subject.…