Institute of Internal Auditors surveys reveal more accountability, less outsourcing

<p>ALTAMONTE SPRINGS, Fla. – Who’s accountable to whom and what is accounted for continues to be addressed and reviewed, the Institute of Internal Auditors trade group is discovering through a number of ongoing online surveys. One of the IIA’s recent flash polls solicited feedback on accountability on internal control through written reports from internal auditors to senior management and the results ran the gamut from 414 respondents within a number of organizations in the financial, insurance, manufacturing, healthcare and other industries. Indeed, in April, IIA’s president William Bishop was invited to speak before the Special Committee of the Board of Directors of the New York Stock Exchange. There, he emphasized the “strengthened corporate accountability,” identifying the board, senior management, the internal auditors, and the external auditors as the “cornerstones of the foundation on which effective governance must be built.” He drove home the point that of “providing a benchmark against which the public could reliably gauge the fulfillment of fiduciary duties by all parties in the governance process.” If the IIA’s flash surveys are any indication of the ripple effect the Enron/Arthur Andersen debacle has created, internal auditors may be rethinking the way accountability and procedures are handled. For instance, when asked does the internal auditing organization provide senior management and/or the audit committee with a written report on internal control, 38% of respondents said they do but on internal audit work only. Surprisingly, 29% said the internal auditor does not provide such a report. The majority of respondents (88%) include financial accounting controls in the internal control report, followed by 66% that include the reliability and integrity of both financial and operational information. Roughly half at 49% include data on how the organization is compliant with laws, regulations and policies. For those organizations that provide a written report in the annual report, the chief financial officer (69%) is typically the one who signs the report, followed by the chief executive officer at 49%, chairman of the board (40%), external auditor (15%) and chairman of the audit committee. Approximately 20% of respondents also solicit signatures from the organizations’ controller, chief operating officer, compliance officer and chief accounting officer among others. In a closely related IIA survey, 246 respondents were asked to provide comments on internal audit and business assurance. Specifically, IIA wanted to know the likelihood that an organization’s internal audit department was being outsourced. The majority (88.6%) indicated no plans to outsource with 2.4% that are currently doing so. Most organizations surveyed have between one and five auditors (38.2%) followed by 25.2% that have between 11 and 25 auditors. Seven percent of respondents have more than 50 auditors. Not surprisingly, many online respondents (139) said “a proactive department that is responsible for providing business assurance and identifying business risk” is `very important.’ “A highly efficient department that continuously monitors the organization, providing accurate timely information,” was `quite important’ for 109 respondents. Specifically, more than half (161) said targeting business risk is `extremely important’ in concordance with what executive management’s expectations of an organization’s internal audit department. Ensuring internal compliance was also of very high importance (158) followed by ensuring regulations compliance (133) and supporting corporate governance (124). To gauge industry effects pre and post Enron, IIA asked `what has been the impact of your audit organization over the last year?’ Roughly 120 said the amount of responsibility has increased and the organizational profile has also increased (111). Still, the amount of influence from an audit on strategic decisions remained the same over the last year, said 181 respondents. -</p> <p>[email protected]</p>