2023 - Page 4 of 5 - Audit Beacon

April 10, 2023

6 Things Internal Auditors Should Remember About Human Nature

As a young internal auditor, I concentrated on learning technical skills of the profession. I came to appreciate the importance of developing an audit plan at the beginning of every engagement, documenting results of the audit, and crafting a well-written audit report. I also learned how important it was to understand the operation/business of the area I was auditing. These skills served me well throughout my career. However, I can honestly say the technical skills were easy to learn compared with the soft skills I needed to hone to be truly effective.

I have led or served on scores of audit teams focused on an incredible array of industries and operations.…

April 3, 2023

7 Common Mistakes That Will Doom an Internal Audit

In recent months, there have been some excellent articles on mistakes that internal auditors should avoid in planning and conducting internal audit results, and reporting engagement results. As I have absorbed the wisdom of my colleagues on these important topics, it reminded me of an article I wrote a number of years ago on mistakes I have witnessed over the years that doomed an internal audit. These are not mistakes that kept the audit from being completed. They are mistakes that keep the audit from fulfilling its full potential.

In too many instances internal audits fail to live up to their potential for reasons that could easily be prevented.…

March 27, 2023

Surprise! Proposed IIA Standards Will Mandate Internal Audit Ratings on Findings and Reports

By now, most internal auditors are aware that The IIA has released long-anticipated proposed revisions to its Global Internal Audit Standards. As I recently shared in an AuditBoard blog calling attention to these changes, they would represent “the most sweeping change to the standards in more than 20 years, and present a significant opportunity for internal auditing and its future.”

Until now, I have elected not to provide extensive public commentary on the proposed standards, preferring instead to offer (generally positive) feedback to IIA leadership privately. However, there is one particular proposed change that I feel compelled to address: The standards would mandate ratings (rankings or other indications of priority) for internal audit engagement findings and a rating for the aggregated engagement results.…

March 20, 2023

New Report Reveals Surprising Insights from Internal Audit Executives

Readers of my blogs will know that I often draw attention to new thought leadership on the internal audit profession. I recently highlighted some timely benchmarking data from The IIA. Over the years, there have been countless research reports, surveys and opinion pieces published that have served to advance the profession. The global business consulting firm, Protiviti, recently, published the findings from its 2023 Next-Generation Internal Audit Survey. I was pleasantly surprised by some of the results.

As Protiviti’s headline declares – “Internal audit’s path to continued delivery of value and relevance is strongly tied to adopting innovative approaches to talent, and technology enablement…” I suspect most of us would agree with that assessment – no surprise there.…

March 13, 2023

New IIA Report Is a Timely Benchmarking Resource for Internal Auditors

For 15 consecutive years, The IIA has used its impressive reach to survey internal audit professionals throughout North America. The 2023 North American Pulse of Internal Audit report is now available, and it once again offers timely data for benchmarking by leading internal audit functions. It should be considered a go-to resource for those dealing with budgeting, staffing and risk-based audit planning.

For this year’s report, The IIA surveyed more than 560 senior internal audit leaders – 83% of whom are CAEs. Respondents were primarily from organizations headquartered in the United States (83%) and Canada (11%). As in past years, audit leaders were surveyed on key resource trends and internal audit’s plans and priorities.

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March 2, 2023

6 Things Audit Committee Members Often Won’t Say to Internal Audit

Relationships between audit committees and chief audit executives (CAEs) have become increasingly more complex as the risks facing organizations have become more diverse and dynamic. Indeed, audit committee members often comment that they are turning to internal audit more often for an expanding scope of assurance and advisory services.

But the relationship between the audit committee and the CAE is often complicated by personal dynamics and the awkwardness that comes with “constructive feedback.” As a result, I have often found that audit committees are uncomfortable pointing out to the CAE what internal audit could do better. Instead, they leave it to management to deliver the news, and the translation isn’t always pure.…

February 20, 2023

The Perils of Internal Audit as ’Corporate Police’

I recently saw a LinkedIn post with a compelling photograph of a smiling police officer and the caption, “Internal Auditors Are Not the Organization’s Police Force.” My first instinct was to agree with the post, but I reflected on the fact that many are seen as playing the role of corporate cop – some by their own choice, some by the choice of management.

Those internal auditors who choose to be “the police” by the way they execute their roles should never complain about relationship struggles they might endure. Choices have consequences.

But as I have observed in my blog over the years, the reality is that many internal auditors are asked to assume responsibilities involving corporate investigations.…

February 13, 2023

When an Internal Audit Client Shows You Who They Are – Believe Them!

Famed American poet Maya Angelou once observed: “When people show you who they are, believe them the first time.” I have always found that to be incredibly sound advice, in both personal and professional relationships. Those words came to mind recently when a chief audit executive (CAE) shared with me an experience with an internal audit client.

The saga started when a new director took over corporate procurement two years ago. The CAE’s staff met with the procurement director at the beginning of an internal audit, and they were warmly received. The director spoke glowingly about the importance of internal audit, and said he looked forward to the assurance they would provide about the effectiveness of procurement operations.…

February 6, 2023

‘Good Internal Auditors Ain’t Cheap’ and ‘Cheap Internal Auditors Ain’t (Always) Good’

OK, I know, my headline isn’t grammatically correct. But in full transparency, I repurposed the phrase from Norman Keith Collins, known popularly as Sailor Jerry,a prominent 20^th century American tattoo artist from Hawaii. I don’t normally quote tattoo artists, but I think Sailor Jerry was on to something: You generally get what you pay for.

What does all of this have to do with internal auditors? I believe it is precisely the problem that plagues some internal audit functions, and it is a contributing factor to the lingering talent shortage facing the profession. I also believe that it is not always an accident that internal auditors (starting with the CAE) are not paid as well as they should be.…

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.…