CBI: Internal audit critical for risk management

INTERNAL AUDIT is central to risk management and provides a "critical extra line of defence", according the to director general of the Confederation of British Industry.

Addressing the Institute of Internal Auditors' (IIA) annual dinner, John Cridland (pictured) said that, in these risk-aware times, the forward-looking focus of internal audit has never been so important.

The discipline makes it "possible to identify deficiencies in risk management and take action to address them before they lead to catastrophic failure", he said; lessons that News Corporation is learning the hard way.

Cridland criticised the direction of European commissioner Barnier's audit investigation, the consultation period for which ends this week. He questioned the logic of favoured options such as joint audits and mandatory rotation, saying that they risk stifling quality and inflating cost. Instead, he said that attention should be focused on contingency planning and boosting competition in the audit market, including provision of non-audit services.

Around 250 invitees attended the lavish dinner, with PwC heavily represented among the firms. IIA president Melvyn Neate also addressed the crowd, focusing on the place of internal audit in changing financial markets and the value of risk management in an uncertain economy.