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Around the globe Ireland - auditing in Ireland - Brief Article

Internal Auditor, Dec, 2001 by Donal Cahalane

THE ORIGINS OF internal auditing in lreland are somewhat obscure. During the 1920s, contemporary economic and political thinking led the country to adopt a protectionist approach to trade, with a preference for fostering smaller, local companies. The more prominent businesses included a number of large British subsidiaries, based on the U.K. mainland. Internal audit departments of these companies ultimately played a part in raising Irish subsidiaries' awareness of the value of properly structured internal audit functions.

In the 1930s and 1940s, many state-owned corporations were formed, particularly in the power, transport, services, manufacturing, and processing industries. At that time, Southern Ireland began looking to other countries for guidance on emerging management theory and best practices, including corporate governance.

OVERSEAS SUPPORT

In the early 1960s, then-President Eamonn de Valera lent his support for the profession by meeting with prominent internal audit figures from the United States. One such figure was Joe Davis, a seminal thinker on the subject. On a number of occasions, Davis subsequently lectured on internal auditing at the Irish Management Institute, a leading business school in Dublin.

American and British practitioners influenced internal auditing significantly in the 1960s. During that time, a free-trade policy was introduced, aimed largely at attracting U.S. corporations to Ireland. An autonomous Irish Institute of Internal Auditors (IIA) chapter existed for a brief period, but it proved too small to survive on its own, and Irish auditors ultimately joined The IIA's London Chapter. Subsequently, these groups evolved into the present-day IIA-U.K. and Ireland.

GROWTH IN NUMBERS

By the 1970s, the internal audit profession in Ireland began taking shape, and the number of professionals entering the field increased substantially in the following two decades. Today, IIA-UK and Ireland has approximately 400 Irish members, and it is estimated that the number of internal auditors practicing in Ireland is several times that figure.

Roughly one-third of The IIA's Irish membership works in Northern Ireland, predominately in the public sector. In the South, the financial industry and public sector are well-represented. IIA membership is also expanding to include municipal and health-service organizations.

ON THE RADAR SCREEN

Government-sponsored inquiries into several recent high-profile financial scandals have identified internal control and governance deficiencies, prompting today's Irish auditors to focus on topics such as risk management, ethics, compliance, and e-commerce. Public-sector internal audit reviews by the nation's comptroller and auditor general have also demonstrated fundamental weaknesses in audit operations. As a result, best practices, such as the widespread use of audit committees, are now being implemented on a broad scale.

Additionally, several recent national incidents have focused the country's attention on auditing: televised hearings of a parliamentary inquiry into banks' handling of tax issues, judicial inquiries into corrupt political and business practices, and the mishandling of infected blood for transfusion purposes. As a result, the profile of internal auditing has been raised, and Ireland's audit practitioners are becoming increasingly valuable to the country's organizations.

DONAL CAHALANE, director, IIA-UK and Ireland, and head of internal audit, Central Bank of Ireland, contributed to this article.