|
|
21 May 2009
Many internal audit teams do not have the manpower to root out and manage the full range of company risks as the chances of fraud rocket in the recession, corporate governance experts have warned.
Robert Hirth, executive vice president at Protiviti, the risk advisers, warned management and boards would need to look more critically at internal audit resources and question whether that level of resource was adequate. ‘There are many organisations that are well-staffed, but there are many more that aren’t, leaving them understaffed qualitatively and quantitatively,’ he said. ‘If that internal audit by quantity or quality is ineffective or inadequate, you will have a weakest link situation.’
‘Internal audit has two key factors remit and risk assessment. A lot of companies haven’t fully factored in these issues. If they did, they would find that they were understaffed.’
Companies with complex treasury operations, subsidiaries in a number of different countries and those with a lot of reliance on IT security were particularly at risk.
‘Its hard for a small audit team to cover all those bases,’ said Hirth.
After high-profile cases like the Cattles scandal shook the market and led to the suspensions of several senior managers, including the group and divisional FDs, internal auditors would be under even more pressure to identity fraud earlier, said Hirth.
‘With management, internal audit, external audit and the audit committee, the theory is you will get the perfect governance business model but it will never be good enough to cover everything. You can never take risk to zero,’ he added.
The Institute of Internal Auditors said: ‘It is crucial that organisations assess the breadth of the assurance they are expecting their internal audit departments to provide and that they resource the department accordingly.’
You may also like
Search thousands of financial jobs:
Search thousands of financial jobs:
Careers
Search for jobs
Click to search our database of all the latest accountancy roles
Create a profile
Click to set up your profile and let the best recruiters find you
Jobs by email
Sign up to receive regular updates with the latest roles suitable for you
Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
Visitor comments Add your comment
Encourage better management control rather than sell your resources
I disagree with this article which seems to be trying to sell Protiviti resources to understaffed departments rather than offering to help them ensure that management, who are responsible for internal control, have themselves established effective controls and monitoring mechanisms. Adding value to businesses means helping them understand risk and control better, rather than doing it for them.
Posted by: Simon King, 22 May 2009 | 00:00
Missing the point
The economic climate might increase people's desire to supplement their income but management should have appropriate controls in place themselves, and be checking them regularly. If management has insuffienct resources then they may need help from internal audit to do the checking but management shouldn't rely on someone else. It is true that if finance functions are already so lean that they need to rely on internal audit the organisation already has a problem, but the internal auditors should then be reviewing the risk management framework and helping get this right rather than focusing on detailed checks and controls.
Posted by: Stephen, 22 May 2009 | 00:00
Management own controls on their processes
We cannot abdicate responsibility for effective controls to Internal Audit (or external audit for that matter). Controls are management's responsibility. Effective controls can actually improve business performance as well as reduce rhe risk of 'inappropriate activity'.
Posted by: Dan, 22 May 2009 | 00:00
internal audit
i am a certified internal auditor working for a multinational oil company in middle east.
your article is very much relevant in todays turbulent times.
we are in the middle east.I dont think orgaisations here have learnt their lessons from recent experiences. the news that internal audit departments would be a mandatory requirement is spreading. we dont see any postive signals of this 'news' becoming a reality.
Posted by: suresh kumar, 23 May 2009 | 00:00