Internal audit in euro storm

Internal auditors do not have the skills needed to deal with the introduction of the euro, according to PricewaterhouseCoopers internal audit services partner Ian Hollows.

Speaking at an internal auditing conference last week, Hollows claimed that far too many internal auditors had a financial background, which meant they faced difficulties in widening their focus to include strategic issues.

He said: ‘I doubt that internal auditors have the skills necessary to deal with this and I have been disappointed to find that many auditors have only been involved in preliminary meetings.’

But he added that internal auditors have a vital role to play in reviewing project arrangements, implementation and performance reporting to ensure that companies can prepare for the euro while limiting the possibilities both for fraud and error.

Their input would become more important as UK companies conducting business in Euroland realise that they have to be able to bill in euros while also considering the implications of the introduction of euro notes and coins in 2002.

But one head of internal audit from an international company rejected the criticism as unfounded and unrealistic on the grounds that most companies only employ internal auditors on the ratio of one to every 100 or even one to every 1,000 managers.

He said that it was obvious who has to take the lead in terms of resource in implementing major changes such as using the euro.

‘A company’s decision to bill or not in euros is made by the top management,’ he said.

‘The implications for internal auditors using the euro are no greater than the implementation of any system changes that we have to deal with.’

The role of the internal auditor should therefore be to stimulate discussion about the issues of introducing the euro and to encourage management to review its strategy.