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.
In essence, the invitation to ring the opening bell on the floor of the world’s largest stock exchange was recognition that internal auditors, who generally work behind the scenes, are instrumental in fostering trust at institutions across sectors. And that is precisely why I have long argued that internal audit serves the public interest – regardless of the institution in which it operates.
Which brings me to The IIA’s proposed “Global Internal Audit Standards” – specifically, inclusion of “public interest” in the Purpose Statement section. For those who may not have noticed, the proposed statement reads (emphasis added):
“Internal auditing enhances the organization’s success by providing the board and management with objective assurance and advice.
Internal auditing strengthens the organization’s:
- Value creation, protection, and sustainability.
- Governance, risk management, and control processes.
- Decision-making and oversight.
- Reputation and credibility with its stakeholders.
- Ability to serve the public interest.
Internal auditing is most effective when:
- It is performed by qualified internal auditors in conformance with the Global Internal Audit Standards, which are set in the public interest.
- The internal audit function is independently positioned with direct accountability to the board.
- Internal auditors are free from bias and undue influence and committed to making objective assessments.”
During the proposed Standard’s public comment period, which recently ended, there was ample critique by passionate internal audit thought leaders/advocates of the Purpose Statement – for what it did and did not include. I will leave it to The IIA’s Standards Board to evaluate the comments and refine the statement as appropriate. But what I desperately hope is that it will retain the acknowledgement that internal audit serves the public interest!
I have many vivid memories of the NYSE ceremony on June 30, 2016, but one that I have replayed in my mind many times occurred before the opening bell. We were gathered in a conference room near the trading floor when an executive of the NYSE praised the work of The IIA and indicated the pride the exchange felt in featuring us as part of that day’s proceedings. In a time when investor trust was slowly rebuilding in the wake of the great financial crisis of 2008, it was inspiring to know that the NYSE recognized internal audit’s value to the organizations it serves and its crucial role in good governance.
For many, the means by which government auditors and external auditors serve the public interest is clear. Fostering trust in government institutions and publicly available financial statements are vital to our system of government and capital markets. However, unlike government auditors, external auditors and others, the work of internal auditors in publicly traded companies is often carried out behind corporate doors and with little fanfare.
Each year, internal auditors in companies large and small around the world provide management and their boards advice and assurance on the effectiveness of risk management and internal controls. Their tireless efforts result in more efficient and effective corporate operations and reduced risks of waste, mismanagement and fraud.
Most investors are clearly motivated by increased share value and the return on their investment. But trust is a key element in decisions to invest. Investors must trust the financial information they are provided, the competence and effectiveness of management, and the diligence of boards of directors. When any or all of those fail, investors grab their money and head for the hills – often reluctant to invest again until trust is restored.
Volatility in the capital markets over the past two decades has been driven as much by wavering trust of investors as any other factor.
I agree with former Australian Prime Minister Kevin Rudd who observed, “The stability of global financial markets is a public good.” For more than a decade, I have been arguing that internal auditors in the corporate sector serve the public interest by fostering trust in the capital markets. By providing management and boards with timely and relevant assurance and insights on risk, control and governance, internal auditors help their companies earn and maintain the trust of investors that is so vital to the success of the companies and, ultimately, the capital markets.
Author Frank Sonnenberg observed, “Trust is like blood pressure. It’s silent, vital to good health, and if abused it can be deadly.” Internal auditors are vital to maintaining the kind of corporate health to which Sonnenberg refers.
As I have observed before, distrust in the corporate sector is often brought on by C-suite executives who become disconnected from the plight of the average worker, boards who defer to management rather than provide true oversight, and misaligned or toxic cultures. The need for independent, strong and well-resourced internal audit functions has never been more critical.
In a blog celebrating the NYSE event, I urged internal auditors to undertake self-appraisals to ensure they are serving their companies to the best of their abilities. Some key questions in this self-appraisal should include:
- Are reporting lines to management and the audit committee clear and distinct? A clear separation of administrative and functional reporting supports internal audit independence.
- How strong is the current relationship with management and the board/audit committee? Strong communications and trusting relationships are integral to good governance.
- How are audit recommendations viewed by management, and how readily are they implemented? This serves as a solid barometer of management’s desire to “do the right thing” to ensure a sustainable future for the company and maintain shareholder trust.
- Is internal audit sufficiently resourced to address the risks of the organization properly? This is another measure of the organization’s commitment to good governance.
- Does the audit committee take the lead in the CAE’s hiring, firing, review, and compensation? Too often, these responsibilities are abdicated to management, which can erode internal audit independence.
The IIA ringing the opening bell at the NYSE in 2016 should have been a clarion call for internal auditors — and not only those in publicly traded companies — to embrace their role in building and maintaining trust of and within their organizations.
To be sure, progress has been made, but much remains to be done as we quietly go about serving the public interest in our companies and in capital markets around the world.
What are your thoughts on internal audit’s service of the public interest? Share them with me on LinkedIn or Twitter, or drop me an email at blogs@richardchambers.com.
21 Comments
Psychic Parties
Thanks a lot for sharing this with all of us you really know what you are talking about! Bookmarked. Kindly also visit my website =). We could have a link exchange arrangement between us!
situs porno
hey there and thank you for your information ? I have certainly picked up anything new from right here. I did however expertise a few technical issues using this web site, as I experienced to reload the web site lots of times previous to I could get it to load properly. I had been wondering if your hosting is OK? Not that I am complaining, but slow loading instances times will sometimes affect your placement in google and could damage your high quality score if advertising and marketing with Adwords. Well I am adding this RSS to my e-mail and could look out for much more of your respective exciting content. Ensure that you update this again soon..
Fortbite
It is really a great and helpful piece of information. I?m glad that you shared this helpful information with us. Please keep us informed like this. Thank you for sharing.
horror shorts
Hi there, i read your blog occasionally and i own a similar one and i was just wondering if you get a lot of spam comments? If so how do you stop it, any plugin or anything you can advise? I get so much lately it’s driving me insane so any assistance is very much appreciated.
quickbooks payroll
Hey there! This is kind of off topic but I need some advice from an established blog. Is it hard to set up your own blog? I’m not very techincal but I can figure things out pretty fast. I’m thinking about creating my own but I’m not sure where to begin. Do you have any points or suggestions? Many thanks
bokep indo
As I web site possessor I believe the content material here is rattling great , appreciate it for your efforts. You should keep it up forever! Good Luck.
hot guy masturbating
Excellent goods from you, man. I’ve understand your stuff previous to and you’re just too great. I actually like what you have acquired here, certainly like what you are stating and the way in which you say it. You make it entertaining and you still care for to keep it smart. I cant wait to read much more from you. This is actually a terrific site.
strip club nashville
Thanks for your blog post. What I would like to make contributions about is that computer system memory must be purchased but if your computer cannot cope with whatever you do by using it. One can add two good old ram boards with 1GB each, by way of example, but not one of 1GB and one with 2GB. One should look for the car maker’s documentation for one’s PC to be sure what type of memory is needed.
stripper near me
Have you ever considered creating an ebook or guest authoring on other websites? I have a blog centered on the same ideas you discuss and would love to have you share some stories/information. I know my audience would appreciate your work. If you’re even remotely interested, feel free to shoot me an e mail.
graliontorile
I?¦ve been exploring for a little for any high-quality articles or blog posts on this kind of area . Exploring in Yahoo I finally stumbled upon this web site. Reading this info So i am happy to show that I’ve an incredibly good uncanny feeling I discovered just what I needed. I such a lot definitely will make certain to don?¦t disregard this website and provides it a glance on a continuing basis.
dagsmejan sleepwear review
It?s actually a nice and helpful piece of info. I am satisfied that you shared this useful information with us. Please stay us up to date like this. Thank you for sharing.
help energy drinks
Greetings! I’ve been reading your site for a long time now and finally got the bravery to go ahead and give you a shout out from New Caney Texas! Just wanted to tell you keep up the fantastic job!
bingo plus
This is hands down one of the finest articles I’ve read on this topic! The author’s extensive knowledge and passion for the subject are evident in every paragraph. I’m so appreciative for finding this piece as it has deepened my knowledge and ignited my curiosity even further. Thank you, author, for investing the time to create such a outstanding article!
film porno
Undeniably consider that which you said. Your favorite reason appeared to be on the web the easiest thing to be aware of. I say to you, I certainly get irked even as people think about issues that they just don’t know about. You controlled to hit the nail upon the highest and also outlined out the entire thing without having side effect , other folks could take a signal. Will probably be back to get more. Thank you
miami strippers
I?m impressed, I must say. Really hardly ever do I encounter a blog that?s both educative and entertaining, and let me let you know, you may have hit the nail on the head. Your idea is outstanding; the problem is one thing that not sufficient individuals are talking intelligently about. I am very glad that I stumbled across this in my search for one thing relating to this.
credit card processing ISO programs
I was just seeking this info for some time. After six hours of continuous Googleing, at last I got it in your website. I wonder what is the lack of Google strategy that do not rank this type of informative web sites in top of the list. Generally the top sites are full of garbage.
ISO agent programs
I was just seeking this info for a while. After six hours of continuous Googleing, finally I got it in your site. I wonder what is the lack of Google strategy that do not rank this type of informative web sites in top of the list. Normally the top sites are full of garbage.
gift bags
Amazing blog! Is your theme custom made or did you download it from somewhere? A theme like yours with a few simple tweeks would really make my blog jump out. Please let me know where you got your theme. Thanks
tampa strip club
Thanks for your suggestions. One thing I have noticed is the fact banks plus financial institutions really know the spending patterns of consumers and as well understand that the majority of people max out there their real credit cards around the getaways. They properly take advantage of this particular fact and then start flooding your current inbox and also snail-mail box with hundreds of no interest APR credit cards offers soon after the holiday season finishes. Knowing that if you’re like 98 in the American open public, you’ll soar at the opportunity to consolidate card debt and move balances towards 0 interest rate credit cards.
Situs Slot Online
Thanks, I’ve been seeking for details about this topic for ages and yours is the best I’ve found so far.
credit card processing ISO programs
Wow, this article is mind-blowing! The author has done a tremendous job of presenting the information in an compelling and educational manner. I can’t thank her enough for sharing such valuable insights that have definitely enhanced my understanding in this topic. Hats off to her for producing such a masterpiece!