Internal Audit Function Needs Greater Support, Says Report

by CFO Innovation Asia Staff, 12 July 2012

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corporate governance internal audit risk management Thomson Reuters

More visible and vocal support for the internal audit function is needed from senior management within their organisations as the changing demands of today’s regulatory and risk environment are putting them under increasing pressure to do more with less, according to a new survey by Thomson Reuters.

A combination of increasing regulation, a renewed focus on fraud and corruption and heightened scrutiny around risk management from executives, corporate boards, shareholders and regulators are placing greater emphasis on how the internal audit function can play a role in evaluating and mitigating risk.

“Audit committee chairs and executive management alike need to understand and address the increasing scope and strain on internal audit,” says Mark Schlageter, managing director, Governance, Risk and Compliance, Thomson Reuters.

Schlageter notes that a vital factor in easing the pressure on the internal audit function is the provision of adequately skilled resources and the ability to leverage off technology to meet the growing demands and challenges.

"The often under-valued task of internal auditing can be made substantially easier where senior managers visibly and vocally demonstrate support for the internal audit function and promote a culture of sound corporate governance,” says Schlageter.

Over 57% of respondents indicated that increased focus on risk and control was the top challenge for the year ahead.

While risk management was seen as a top three priority for organisations and was one area where the internal audit function’s time and resources are primarily applied, only 12% of firms claimed to have robust and embedded risk management framework and resources in place.

Over 40% of respondents indicated that interactions with the compliance and risk management teams were ad-hoc or were unsure of the frequency of these meetings.

The self assessment on the maturity of audit business processes indicates that many see room for improvement and the opportunity to move to a more robust operating model.

Why do people waste their

Submitted by Anonymous on 19 July 2012 - 7:01am

Why do people waste their time writing articles like this? Essentially, there is only one tool Auditors use and that is the COSO model. You cannot detect tone at the top, which is a matter of opinion, or ethics with that model. Its use is so limited and only auditors can understand its functions. Let me make it very clear, Internal Audit always claim it is about the client. However, after all the buy-ins from upper management before issuing the report it is so watered down it is completely useless. This article writes about the need and importance of audits but the truth is most audits are written in language only auditors would understand and has almost nothing to do with a particular business unit or transaction. If a company is faced with the choice between an internal audit, which is difficult to understand and watered down because of buy-ins and the COSO model, or to make a decision that makes or breaks the business I am sure we all know what the answer would be.

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