The Institute of Internal Auditors (IIA) is calling on all corporate boards to make greater demands on their internal audit departments, saying they have learnt the lessons of the financial crisis and are now better prepared to help protect companies against financial and other risks to the organisation.
Speaking at the institute's annual UK conference in London, IIA chief executive Dr Ian Peters said that boards need better education from internal auditors about risk and control, to help them make better informed decisions.
His views were echoed by those of Roger Marshall, a director of the Financial Reporting Council (FRC). Marshall, who also serves as audit committee chairman for Old Mutual, was instrumental in drawing up the IIA's guidance on Effective Internal Audit in the Financial Services Sector published earlier this year.
Peters said: 'The new guidance makes a number of recommendations to increase the scope and influence of internal audit. But internal audit cannot deliver its true value to corporate governance unless it is harnessed effectively by stakeholders such as boards, audit committees, chief executives and accounting officers. They cannot harness internal audit effectively unless they are clear about the outcomes they need and want from it.'
In his comments at the conference, Marshall said the role of internal audit had come under much greater scrutiny in the aftermath of the financial crisis, stating that this had been good news for the profession as senior executives now understood the internal auditor's role more fully.
'The recommendations made in the institute's guidance on internal audit in the financial services sector give those who have ultimate responsibility for businesses in that industry a much clearer idea of what they should demand of their internal audit departments - for example that internal audit needs to have a proper understanding of a business's particular risks, and that its remit needs to be unrestricted. Clearer expectations of internal audit will help internal audit teams to do their job better,' Marshall said.
