RegulationAccounting StandardsInternal audit code helps drive behavioural shift in boardroom, survey finds

Internal audit code helps drive behavioural shift in boardroom, survey finds

Among the bigger shifts in corporate behaviour was access to the board

Internal audit code helps drive behavioural shift in boardroom, survey finds

A CODE that sought to drive and improve the behaviour of internal audit functions for boards, audit committees and regulators, appears to be harvesting the cultural and governance fruits of its labour, two years after its launch.

That’s the finding of a survey of heads of internal audit (HIAs) and interviews with audit committee chairs on the way the financial services sector has learnt to deal with risk and governance issues.

The Chartered Institute of Internal Auditors’ (IIA) financial services code was launched in July 2013 to “help firms improve their management of risk as they respond to intense public, investor and regulatory pressure to improve corporate governance”.

Among the bigger shifts in corporate behaviour was access to the board. The code recommends the primary reporting line of internal audit departments should be to the board, to which the survey found that 72% of heads of internal audit (HIA) are line-managed by their audit committee chair, up from 56% in 2013.

It made a dramatic impact on the status of audit chiefs with over eight out of ten (84%) taking part in executive committee meetings, compared to just 48% in 2013. All respondents have full access to audit committee papers (89% in 2013), 90% to board papers (69% in 2013) and 84% to executive committee papers (69% in 2013).

The code also recommended that the internal audit’s scope should encompass risk and control culture as well as the setting of risk appetite, some 93% now carry out audit work on risk culture compared to 54% in 2013. And 90% now carry out work on the setting of risk appetite, significantly up from 59% two years ago.

Ian Peters, IIA chief executive, said: “Two years since the code was introduced, we can see real change in how the financial services sector views internal audit. The results reveal the extent to which financial services institutions are embracing the code’s recommendations, the opportunities the Code presents, and the challenges it poses.

“The code has driven change in the area of corporate culture. Our report Culture and the role of internal audit – looking below the surface released last year found that the audit of corporate culture and tone at the top are now priorities for financial services firms.”

 

Related Articles

Bupa’s head of internal audit joins CIIA

Accounting Standards Bupa’s head of internal audit joins CIIA

1y Calum Fuller, Reporter
Tough risk assurance systems still lacking, says IIA report

Accounting Standards Tough risk assurance systems still lacking, says IIA report

2y Chris Warmoll, Writer
IIA urges greater assurance on reporting environmental and social impacts

Accounting Standards IIA urges greater assurance on reporting environmental and social impacts

2y Chris Warmoll, Writer
IASB: Auditors fail to see reports as models of communication

Accounting Standards IASB: Auditors fail to see reports as models of communication

5y Rachael Singh, Writer
FRC hedges bets over audit governance

Accounting Standards FRC hedges bets over audit governance

6y Richard Crump, Writer
Tesco's troubles a 'self-inflicted wound', ACCA conference told

Accounting Standards Tesco's troubles a 'self-inflicted wound', ACCA conference told

2y Chris Warmoll, Writer
IIA updates qualifications as profession goes global

Accounting Standards IIA updates qualifications as profession goes global

3y Chris Warmoll, Writer
CIPFA to launch first public audit qualification in 2015

Accounting Standards CIPFA to launch first public audit qualification in 2015

3y Chris Warmoll, Writer