The Institute of Internal Auditors Chairman LeRoy E. Bookal has outlined the key challenges confronting internal auditors after the recent round of accounting scandals and legislative reforms. The challenges focus on ways to create a working environment conducive to creating opportunities for internal auditors to add value.
For maximum value-added, Mr. Bookal urges internal auditors to concentrate on these areas:
- Working relationships. Internal auditors must do their part to establish and maintain good working relationships. There should be a comfort level that allows any of the four key parties (management, directors, external auditors and internal auditors) to pick up the phone at any time and seek advice, either as a group or in a private session.
- Awareness and problem-solving. In addition to ensuring that activities on the audit plan are performed each year, internal auditors must also participate actively in planning sessions and meetings. By cultivating a solid understanding of the business and its challenges internal auditors can go beyond just pointing out what is wrong and become part of the solution.
- Progress through sharing. Every major audit failure or control breakdown brings with it an opportunity to learn from the experience of others. After an event like Enron, auditors in all organizations should analyze what happened and why it happened so that they can apply this knowledge to their own organizations.
Ways to convince management, the board, and the general public of the value that internal auditors can bring to governance processes include: complying with the Code of Ethics and Standards for the Professional Practice of Internal Auditing, obtaining The IIA's Certified Internal Auditor designation and using formal quality assurance review mechanisms.
Mr. Bookal recognizes that the above may require internal auditors to "step out of their traditional comfort zone." But, he says, the results will be well worth it. By stepping up to these challenges, internal auditors can add value to their own organizations and employers and also help businesses and the public better understand the important roles that internal audits play in the process of corporate governance.