As the recession grinds on what should internal auditors be doing differently?

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This was the theme of a keynote I presented on March 17, 2010, titled: Economic Crisis- Auditors Evolving Role. As a former CAE, CFO and CEO, I implored the over 150 internal auditors to put themselves in their management’s position. Audit and compliance costs (internal and external) have doubled in the past 8 years. Be assured, this increase has management’s attention!

The recession has put pressure on revenues and companies are responding by cutting costs. IA needs to find ways to reduce compliance costs while expanding coverage. I proposed two, low cost high imagination, solutions. Outsourcing aspects to IA to lower cost countries and using automation through continuous monitoring of controls CCM.

I discussed the trend of business process outsourcing (BPO) of for example, payroll, payables and recently accounting and mail room functions, to countries such as Costa Rica and India. As for CCM, I suggested IA should be recommending it to operations, as a way to build in compliance integrated right into the systems. IA is in a perfect position to identify CCM applications which should reduce cost overtime, expand compliance coverage and save audit time as well.

I quoted Oversight Systems President Patrick Taylor, “ No business process works perfectly. The sooner an error is identified and corrected the better.”  IA should continue to use continuous auditing (CA) to automate the audit process but these concepts (use of automation to drive down costs and expand coverage) should be driven throughout the organization, with CCM.

Another post credit crisis issue is the push to involve IA in ERM. My advice was to set the IA Charter very carefully when it comes to ERM. IA can be a factor but is not in the Board room where most major risks are assumed.