High stakes - Editor's Note - high expections for internal auditors

Internal Auditor, Dec, 2003 by Joanne L. Hodges

IT'S HARD TO BELIEVE THAT ANOTHER YEAR IS COMING TO A CLOSE. (I say this every year.) I could swear that it was just last week that my New Year's resolution bit the proverbial dust. (This, too, I say every year.) Still, whether thrust upon us or realized slowly, the end of the year is a time for many fun things--the holidays, New Year's, and, of course, the opportunity to reflect.

For most auditors, the past 365 days have been like no others in their careers. There were crises to learn about and from, government proposals and the resulting exposure drafts and responses to deal with, and final regulations and standards with which to comply. Interpretations of the U.S. Sarbanes-Oxley Act of 2002, new government and listing exchange regulations, corporate governance principles, and the emerging Committee of Sponsoring Organizations' enterprise risk management framework reiterated the value of the profession and helped solidify it as an integral part of effective corporate governance and risk management. With every new event, another path was added to an already spidery intersection facing internal auditors.

There have been crossroads in the past, you say. True, but they haven't been so numerous or complex, and the stakes haven't been quite as high. For example, there were really three choices to the outsourcing issue: A company could outsource, cosource, or do neither. Today's road, however, is extremely divergent, riddled with risks, and fraught with gray areas. The spotlight is focused on organizational performance and governance. Chief executives are now more accountable than ever for financial-report accuracy, compliance with new laws and regulations, and addressing the challenge of regaining shareholder trust. More and more, auditors are expected to be part of the solution, providing senior management with the assurance it needs to achieve the fine, and sometimes conflicting, balance of the dollar and corporate responsibility.

Today, internal auditing's worth and value are recognized by most business entities, and the only issue remaining is the extent of its role in helping an organization achieve its objectives. To reach those goals, internal auditors are now expected to be more knowledgeable than ever about the organization, be on the leading edge of rules and regulations, and serve as counsel to management and the board. The plus side to that equation is that the demand for competent internal auditors is at an all-time high. On the down side, internal auditors can no longer be passive. This next year, internal auditors will have to determine how the organization might best tap into all that the profession has to offer for enhancing corporate governance and improving risk management.