2023 - Page 3 of 5 - Audit Beacon

June 30, 2023

Courageous Internal Auditors Know When to Walk Away

I frequently scan the headlines for articles related to internal audit. Some news reports are encouraging and indicate how the profession is making real progress. Others are less so, because they highlight the continuing need by internal audit to better foster effective risk management, control, and governance.

But what discourages me most are the reports that reveal how ours is a profession in which interference and retaliation can come even when we’re doing our job – and that courage is as essential as technical skills to fulfilling our mission.

A recent example in which “oversight may have gone to die” comes from Columbus, Ohio.…

June 21, 2023

What Does ChatGPT Really Think About Internal Audit?

Generative artificial intelligence (AI) is taking the world by storm. Since its launch in November 2022, ChatGPT (an AI chatbot developed by OpenAI) has been used by hundreds of millions of people worldwide. In a recent seminar I taught in Rome, more than half of the internal auditors in attendance indicated that they already use it in their professional roles.

Like many, I dipped my toe in the water and tried ChatGPT early on. Unfortunately, I asked questions that it did not answer accurately, so it lost my confidence. However, following some tips from participants in my recent seminar, I reengaged with ChatGPT – this time with more favorable results.…

June 19, 2023

Internal Audit Must Provide Assurance on Ethics in the C-suite, Too!

There haven’t been as many recent high profile corporate scandals involving ethical misconduct by corporate executives, but that doesn’t mean the risk has diminished. As recent as 2018, PwC disclosed a stunning statistic in its annual Strategy & CEO Success Study: more CEOs lost their jobs because of ethical lapses than for poor financial performance or battles with their boards. That had never happened before in the study’s 19-year history.

During the years since the PwC study captured headlines, COVID and an endless stream of risk-induced disruptive events have lessened the focus on ethical misconduct at the executive level. But if history is any indication, two things should be kept in mind.…

June 11, 2023

The Big Myth: Only Accountants Make Good Internal Auditors

I recently shared results of an academic research report that indicated companies seek internal auditors who have accounting, information technology, and business systems knowledge after experiencing major control and risk management failures. The report said companies are “more likely to post an internal auditor job after the revelation of accounting and operational failures” and “more severe accounting and operational failure revelations are associated with an increased demand for the CPA and the CISA (Certified Information Systems Auditor) credentials.”

The findings set off a new debate on social media about why accountants are still considered the gold standard for internal audit talent.…

June 4, 2023

5 Questions to Ask When Interviewing for a Job in Internal Audit

We’ve all been there. The interview for that job we desperately want has gone well – so far. We feel good about our answers, but then comes that dreaded moment. Near the end of the interview, the tables are turned and the interviewer asks: “Now, what questions do you have for me?”

We know it’s coming, yet many are still unprepared for it. They either decline to ask questions, ask questions off the top of their head, or ask questions that can cause the interviewer to wonder whether they would be a good fit.

Honestly, as an interviewer, I often learned as much about the strength of the applicant by the questions they asked as by the answers they gave to my questions.…

May 31, 2023

New Research: Companies Appreciate Internal Audit More After They Get in Trouble

I am always on the lookout for academic research or thought leadership that reflects different or contrarian points of view on the internal audit profession. So, I was immediately intrigued by a recent internal audit-related academic research paper. The report, which has generated some early media attention, concludes that companies are more likely to hire internal auditors after restatements and material weaknesses in internal controls over financial reporting (accounting failures) or compliance enforcement actions (operational failures). While the statistics are not dramatically higher, they do affirm that companies are more likely to appreciate an internal audit function after they get in trouble.…

May 23, 2023

Heads Up Internal Auditors: Emerging AI Compliance Risks Are Genuine

For the past few years, there has been an ongoing debate about whether artificial intelligence (AI) will present risks or opportunities for the internal audit profession. I have taken the position that it will offer both.

If we engage primarily in hindsight and focus our energies on tactical audit engagements, such as assurance on internal controls over financial reporting, we run a significant risk of being disintermediated by AI. However, if we turn our attention on strategic/business risks and other engagements that require professional (human) judgement, we have the opportunity as an enabler to leverage AI, rather than to fear it.…

May 15, 2023

Forget What Happened in the Past: Internal Auditors Really Are Here to Help!

It’s Internal Audit Awareness Month, and a good time to revisit one of the age-old challenges for the profession: Why don’t people believe “we are here to help?”

“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 often write blogs about how internal auditors should be helping their organizations navigate new or critical risks. Surveys continue to indicate that internal audit’s support is genuinely welcomed in many organizations.…

May 8, 2023

Did Banking Regulators Just Throw Internal Audit Under the Bus?

When Silicon Valley Bank (SVB) closed its doors in early March, I joined many in wondering what kind of risk and control environment the bank had. I specifically wanted to know about its internal audit function. How strong was it? Did it share in any culpability?

Normally, questions like those linger unless/until they are answered in subsequent litigation proceedings or regulatory sanctions. It turns out we didn’t have to wait that long for some perspective on SVB’s internal audit.

Late last month, the Federal Reserve released a treasure trove of documents related to its supervision and regulation of SVB and SVB Financial Group (SVBFG).…

May 1, 2023

IT’S INTERNAL AUDIT AWARENESS MONTH: LET’S START AT HOME

If it’s May, it must be Internal Audit Awareness Month. This is when internal audit leaders and advocates around the world turn up the collective volume for the profession and build greater awareness of the value we bring.

Throughout the month, The IIA, its chapters and affiliates, and many others will gather proclamations from government officials, reach out to the community and, conduct myriad other activities to promote recognition and support for internal audit. It is also a time to create awareness among those who might be considering a future in the profession.

In short, Internal Audit Awareness Month is an inspiring time each year to be an internal auditor, and I support the tremendous efforts.…

April 24, 2023

6 Ways a Career in Internal Audit Prepared Me to Be a CEO

I recently marked two years since retiring as Global President and CEO of The Institute of Internal Auditors. Not one to sit around, I have stayed very busy ever since. But I do occasionally reflect on the amazing opportunity I was given to lead the global internal audit profession, including a $70 million enterprise with more than 200 employees.

Thanks to a highly talented and skilled staff, committed board members and other engaged volunteers from around the world, we accomplished so much. That included impressive financial growth, expansive educational and training initiatives, record membership and certifications, and so much more. I’m not gloating; I am truly proud of those milestones and also humbled by the fact that I didn’t do it alone.…

April 18, 2023

Walking a Tightrope When Internal Audit Stakeholder Expectations Don’t Align

One of the features that makes internal auditing so valuable to modern enterprises is that we serve multiple stakeholders, including the board, various levels of management, and even external auditors and regulators. Conventional wisdom is that internal auditors should align their coverage with stakeholder expectations. But the fact is that the various stakeholder groups rarely agree on where internal should be focused to add value.

Differences of opinions among internal audit stakeholders are sometimes subtle, but trying to satisfy everyone can become particularly problematic if the disagreement is between the audit committee and management. In such cases, the chief audit executive (CAE) can feel caught between two very powerful forces.…