Is Internal Audit Irrelevant?
Richard C. Anderson made a great presentation this week at the IIA’s International Conference in Atlanta. One of his points was that internal auditors have been humiliated – because nobody has held them to blame to any degree for the collapse of the banking sector, the failures in corporate governance and risk management, and the tremendous loss in value of investors’ shareholdings all over the world.
Richard pointed out that the Walker report (in the UK) on the causes of the banking crisis didn’t even mention internal audit. We are irrelevant.
Now that’s not totally correct. If you see these posts, here and here, you will see that the questions were asked. Some, including me, said internal auditors should shoulder at least part of the blame.
The point is important, and points to the need for growth in the profession. We will get recognized when we deserve it.
- Where are the NYSE standards that require internal audit to provide an independent assessment of the adequacy of governance, risk management and related controls? It only calls for the presence of internal auditing, without definition of what it does
- Where are the NASD standards that require internal auditing?
- Where is the National Association of Directors’ guidance on the use of internal auditing to fill the board’s assurance function?
- When COSO issued guidance for improving corporate governance, why was there no mention of internal audit?
- Why do so few internal audit functions audit and issue formal opinions on governance processes, risk management, and related controls?
When we are seen as vital by boards, not for detecting fraud but for assurance on governance and risk management, then we will deserve a seat at the table – and be relevant.