The Politics of Internal Auditing

LEARN TO EFFECTIVELY NAVIGATE POLITICAL CHALLENGES TO ADD VALUE TO YOUR ORGANIZATION
Organizations are, by definition, political. They are composed of people who have different individual goals and objectives, different value systems, different approaches to accomplishing their objectives, and different motivating reward systems. When it comes to internal auditing and the reality that internal audit results may reflect badly on some individuals, the potential for political pressure on chief audit executives (CAEs) is great.
This research report addresses political pressure on CAEs and their internal audit departments. Surveying nearly 500 CAEs from various business sectors around the world, researchers Patty Miller and Larry Rittenberg share how effective CAEs work to mitigate political pressure and lessons learned that may help manage political pressure.
Some of the research findings reveal:
Political pressure comes in many forms.
Political pressure can be managed and partially mitigated, but it always exists.
Professional competence is required, but it is not sufficient.
Political pressure exists whether the CAE position is career-focused or rotational.
Due to the nature of organizations and basic human nature to succeed and be respected political pressure will undoubtedly always be a risk in any organization. This research points out some things that can be done to strengthen the culture, improve the governance structure, and build support for internal auditing.

Generously sponsored by The IIA-Toronto Chapter

Patricia K. Miller, CIA, QIAL, CRMA, CPA, CISA, has experience in the areas of governance, risk management, and internal control, with significant consulting and managerial experience in finance, accounting, internal auditing, and risk management areas. She is currently an executive-in- residence for the University of Nevada-Reno, and teaches a graduate course in internal auditing. Her consulting business, PKMiller Risk Consulting, LLC, assists clients in the areas of governance, risk management, and internal auditing.
Patty spent 14 years with Deloitte & Touche LLP in the (San Francisco) Bay Area, serving as the lead risk services partner on some of the firm s most significant technology and consumer business clients, providing internal audit, risk management, control consulting, Sarbanes-Oxley, and related professional services. In this role, she advised clients and audit committees on governance, risk management, and internal control leading practices. Patty also led the Deloitte & Touche national risk management function for internal audit services, providing consultation to other engagement partners on engagement quality and risk management. Patty joined Deloitte & Touche following a 14-year career with Pacific Telesis and Pacific Bell (now AT&T) where she held numerous mid- and senior-management positions in diverse areas including financial management and planning, billing, internal audit, process design and reengineering, project and program management, and merger planning and integration.

Larry E. Rittenberg, PhD, CIA, CPA, Professor Emeritus, University of Wisconsin, Chair Emeritus, COSO, has taught the past 38 years at the University of Wisconsin in the area of auditing, IT auditing, corporate governance, and risk management. During that time, he has been an active member of The Institute of Internal Auditors (IIA). He has served as president of The Institute of Internal Auditors Research Foundation (IIARF), member of the International Professional Practices Oversight Committee, global vice-chair of Professional Practices, member of the Board of Trustees of The IIARF, and member of the Education Committee. He played an active role in developing the Vision for the Profession in the late 1990s, including the drafting of the current definition of internal auditing. During that time, Professor Rittenberg also wrote numerous articles and research monographs related to internal auditing and risk management, including, among others, The Outsourcing Dilemma: What s Best for Internal Auditing (1997, with Mark Covaleski) and Sarbanes-Oxley Section 404: Looking at the Benefits (2005, with Patty Miller), and more recently COSO, Internal Control Integrated Framework: Turning Principles Into Positive Action (2013).
Dr. Rittenberg became the chair of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in January 2005 and served in that role through 2009. He continued to serve on COSO as Chair Emeritus and as a member of the Internal Control Task Force through 2013. Under his leadership, COSO issued guidance on implementing internal control over financial reporting for smaller public companies (July 2006), monitoring the effectiveness of internal control (2009), and fraudulent financial reporting (2010). He played an instrumental role in the development of the Enterprise-Wide Risk Management framework issued by COSO in 2004. He also led the organization in developing a strategic plan aimed at providing more timely guidance on internal control, governance, and risk management around the world.