The success of internal audit is tied tightly to the backing it gets from the Audit Committee
It's common for internal auditors to face pressure to remove, deescalate, or change audit recommendations or results. According to the Institute of Internal Auditors' 2015 CBOK global practitioner study, about 30 percent of internal auditors surveyed said they were pressured to suppress or modify their findings. This statistic may be underreported since it does not include the respondents who selected "prefer not to answer."
I invited an Audit Committee member to speak to my local IIA chapter last year, and before she came she asked me to survey our Chapter membership, asking them "What does internal audit need from their board?" The responses were staggering. Of the 39 responses, 19 included the word "support." The overwhelming response was that internal auditors want more support from their board or audit committee, especially when it comes to audit recommendations and findings.
A few of the responses were as follows:
• "More support for audit findings/ratings. Management often spends more time trying to discredit audit and have legitimate findings removed from reports."
• "Support to interact with management as needed and to really have a seat at the executive leadership table."
• "Appropriate support if it can't be obtained by senior management."
• "Support to remediate control issues when extra costs are involved."
• "Sometimes I feel like our CAE backs down to senior management because he doesn't want to bite the hand that feeds him, but maybe he would feel more comfortable standing up to senior management if he knew the board was on his side."
Securing Audit Committee Support
Internal auditors are in a unique position to evoke positive change and add value to a company, but they can only be successful if they have proper board support. What does proper board support look like? In a healthy culture, the CAE not only has direct access to the audit committee but also trusts the audit committee to be his biggest advocate with executive management, to be equally concerned with mitigating significant risks affecting the company, and to protect him when he takes a stand for well-supported, well-documented audit findings. An audit committee or board can only provide this level of support if they are engaged, understand the company's business, and understand the internal audit function.
Internal audit is an exciting field as we are being called upon to serve our companies in innovative new ways. These new demands on auditors necessitate the hiring of excellent auditors with outstanding critical thinking skills, strategic vision, and strong understanding of key business processes. But the most excellent audit department will fail if board support is lacking. The board plays a critical, if often overlooked, role in the success of the internal audit function, and it is only through increased board support that internal audit departments can rise to the challenges presented to them in our constantly evolving world.
Jami Harris Shine is corporate audit manager for QuikTrip. The opinions and ideas expressed here are those of the author and do not represent the opinions, positions, or policies of QuikTrip or any other organization.