2023 - Page 3 of 5 - Audit Beacon

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.…

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.…