The Non Executive Internal Auditor
As I enter the portfolio phase of my own career, one of the focal points of my pondering concerns the fact that not many internal auditors make it to the boards of companies yet alone their audit committees. How can this be?! The audit committee as represented by the chair has long been viewed as the source of all authority for all things internal audit - our resourcing, our plan, our findings and a point of advocacy for recalcitrant management. One would think that elevating experienced internal auditors to the audit committee and ultimately the chair would be a very natural and wise career progression. Yet how many internal auditors do you know who have made this journey?
Not many.
Isn’t it time this changed?
Lets look at the business case for internal auditors being trusted to make this journey:-
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Hopefully case made. So why is the internal audit profession struggling to make this transition.
Let me share a theory. The audit committee does not only oversee internal controls in relation to risk. It is also responsible for oversight of the financial statements. These are statements that are audited by external audit firms. These are external audit firms who provide the majority of audit committee members. In other words, the external audit profession dominates the audit committee and, as a result, its nominating processes.
It’s time for this to change - obviously I have a conflict of interest as President of the Chartered Institute of Internal Auditors and somebody who is looking to secure some NED work.
Not all conflict of interests are malevolent.
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Non Executive Director & Board Member
7 个月I have been struggling these last 2-3 years to make it on to an Audit Committee as a NED. I’m getting plenty of interviews even when it is clear that the Board Chair wants a qualified accountant for the role. Sadly I do think my selection for interviews is to do with my gender and not my ~20 years in IA and CAE experience of a large international FS group. I keep losing out to ex-Big 4 partners and/or qualified accountants, and most recently to SME capital and liquidity executives. I think the problem lies with our ‘generalism’ not specialism, and the want for deep domain expertise. Ex-Big 4 partners are highly prized which I do not understand. As one of your commentators said the Big 4 have not covered themselves in glory over the years presiding over many large corporate failures. Personally I’m not very good at selling myself which maybe others in the IA profession suffer with? Big 4 partners are salespeople, that’s what they do for a living.
Director & Principal Consultant | Mentor, Advisor, Educator | across Risk Management, Governance & Compliance, Insurance Placement & Claims Management, Business Continuity & Disruption, Health & Safety |
8 个月If Board members sit on Audit & Risk Committees, are they NOT reviewing their own decisions? When Executives select Audit & Risk Committee members is there bias in their selections? When Internal Auditors write Audit & Risk Charters is there an independent review? With failures have not noticed accountability for role of Audit & Risk Committees? There appears to be something missing from a governance perspective ?? Fiscal expertise has not guaranteed a reduction in failures/collapses. So, what is missing on or from our Audit & Risk Committees? ??
Public Sector Audit & Risk Committee Specialist
8 个月I agree that internal auditors are under represented on audit & risk committees. I made that transition my mission in 2015, and now specialise in audit committees for the public sector. I hold a varied portfolio of them, as do a small number of IA colleagues. It can be done, with a focused effort and persistence. I would very much welcome more colleagues from internal audit joining us. The IIA in my jurisdiction, Australia, has made a conscious effort to connect with the audit committee universe, running a Forum and training courses for them, and collaborating with other bodies (like Company Directors).
A Unique Perspective on Risk Assurance, Personal/Professional Development and Mental/Financial Health | Chartered Internal Auditor | Blogger | Investor | Mentor | Social Mobility Advocate | #Kaizen | #IA4.0
8 个月I recently joined an Audit Committee as an Independent Member - this may become a viable route for others in due course. Appreciate this post may be focused more on higher profile positions, but yeah definitely something we as IAs could be doing more of. It's an opportunity to be a customer as well as a seller - as I see it at least.