In 2018 , one topic has often resonated within professional community
Independence of Internal audit.
Largely internal audit professionals felt that:
- There is a lack of support from regulations for internal audit.
- This lack of support manifests in terms of no specific scope, lack of specific reporting structure, lack of safeguards in case management want to not to pay any heeds to governance concern.
This lack of support may take shape of:
- Management bypassing internal control requirements.
- Not giving resources to carry out the internal audit.
- Management may appoint unqualified person as internal audit or can transfer the existing person to somewhere as punishment.
- Internal auditors are not getting rewarded to bring out issues.
- They are getting rewarded for ignoring issues.
Internal Audit professional believes that governments, regulators should define the scope of internal auditors, reporting authorities, remunerations, etc. Once government/ regulators provide their support that internal audit would be in a position invest time and resources in finding frauds, report management impropriety.
All these reasons ignore one fundamental truth.
Internal audit is called internal audit for a reason.
Whenever government wants to cover something specifically, they have used the provisions of statutory audit and asked statutory auditors to cover those area and comment on the same. One of the areas they are required to comment on the existence and effectiveness of internal control.
Maintaining control over processes is always be a management responsibility. Government/ regulators have mandated CEO/CFO certification for the same for certain categories of companies.
For internal audit, regulators have given freedom to company management to define scope, periodicity, methodology.
Management have freedom to define scope, periodicity and methodology.
If government start defining scope, methodology, for internal audit, then there will not be any difference between external audit and internal audit, which will be wastage of resources.
What is the solution?
There is no solution where management gives lip service to internal controls. At the same time, expectations of management differ from one organization to another.
It boils down to expectation management.
Internal audit requires a skill of persistence. This skill, while great to have, is also acting as a chain for internal audit professional working in a ‘wrong company’. This prevent them from thinking about changing themselves.
May be Internal Audit Community should pay attenuation to certain words of wisdom below:
“When we are no longer able to change a situation – we are challenged to change ourselves.” – Viktor E. Frankl
We have little control over the circumstances around us. We are limited to seeking new employment, ending a relationship, dwelling on something or someone we’ve lost, or some other forfeiture. Instead, we must look at what we do have control over. We must go within and approach change as an opportunity for personal growth.
“Everyone thinks of changing the world, but no one thinks of changing himself.” – Leo Tolstoy
The only thing we can truly change is within us. We dream of changing the world, but just like Frankl and Tolstoy observe, we must start that change within. Even Michael Jackson said to start with the man in the mirror. You must first begin to change yourself before we can even consider changing the world to be a reality.
“We cannot change anything until we accept it. Condemnation does not liberate, it oppresses.” – Carl Jung
Freud’s most prized pupil, Jung prided himself on discovering the different parts of the human psyche that were a more “appropriate” explanation of the human mind than Freud could observe. He changed the game because he accepted that times were changing. Freud’s crude language of the stages would not be widely accepted. Jung’s accomplishments made Freud more palatable to the world, making them both relevant today.
Credit (https://brightdrops.com/quotes-about-change)
Call for action:
Inputs/ comments/ suggestion: I welcome inputs/ comments / suggestions from readers on how to approach this issue. Feel free to correct me, educate me.
Share the Article: If you like it, share it. If you share it with others, and they comment, we all will get more learned.
(Disclaimer: The views expressed constitute the opinion of the author and the author alone; they do not represent the views and opinions of the author ’s employers, supervisors, nor do they represent the view of organizations, businesses or institutions the author is, or has been a part of.)
Also published on Medium.
