In the February issue of Finance & Management, we published an article by Robin Pritchard, of the Centre for Internal Audit, Risk Management and Governance at Birmingham City University. The piece focused on the need for audit committees to demand more of their internal audit function, and for internal audit to take a more proactive role in the business. Here, two veterans of internal audit give their responses to Pritchard’s view
The thing that I came away with from reading the article was a sense of the need for internal audit as a function to get a little bit more proactive, a bit less passive – almost acting as an early warning system for the business. And I think it already happens in my industry, financial services.
Everything that Robin Pritchard was talking about has already happened, in part thanks to regulatory pressure and also because of the pressures of the financial crisis.
That said, I think it is a general call to audit committees on one side and internal audit functions on the other. Outside my industry, internal audit has often focused on finance, but there are a number of industries – like finance – where internal audit doesn’t focus on finance at all.
If I look at what my colleagues in some of the utilities do or don’t do with internal audit, it’s all very much focused on what I call the operational risks of the organisation rather than the financials.In talking about the role of the audit committee, it’s interesting that Pritchard uses finance as a hook to ask these questions. But the real thrust is that audit committees are about more than just finance. The audit committee actually works best when internal auditors align their responsibilities with that of the audit committee.
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