Read Richard Chambers' Latest Blog
When Audit Committees Want to "Hear No Evil" From Internal Audit
In his blog, IIA President and CEO Richard Chambers, CIA, QIAL, CGAP, CCSA, CRMA, shares his personal reflections and insights on the internal audit profession. Here's an excerpt from his latest post:
I have long been fascinated by the dynamics between internal audit and the audit committees to whom it reports. Let me say right up front that I believe the vast majority of audit committees are diligent in their oversight. However, as I first shared in a blog in 2015, there are too many instances where audit committees are populated with members who aren't as conscientious as they should be in their oversight roles.
In Extraordinary Circumstances, Cynthia Cooper's riveting account of internal audit's role in unraveling the financial reporting fraud at WorldCom, she recounts the challenges she had in securing an audience with the company's audit committee so that she could share the internal audit results. After prolonged foot-dragging by the audit committee chairman, her patience finally wore out. In a line worthy of a Clint Eastwood film, she sent word to the chairman that, "if he doesn't call a meeting today, I'm going to get on the phone and call one myself." As I have posed on occasion, I wonder how many of us would have such courage; how many of us would ever need to go to such lengths?
Once the chairman relented and called the meeting, the source of his reluctance became clearer. Speaking to Cooper by phone later that day, the chairman chided her, "Do you have any idea what I am about to do? I'm about to blow up this company." There are few (if any) instances in which an internal audit has disclosed information as consequential as that in the WorldCom case. Yet it is surely not the only time that an audit committee or its chair have elected to stick their heads firmly in the sand, rather than hear damaging or uncomfortable information from internal audit.
Read the full InternalAuditor.org blog post from IIA President and CEO Richard Chambers.