Comments on: Internal Auditors – Ignore At Your Risk

By: Ex Deloitte and PwC Consulting

Ex Deloitte and PwC Consulting — Sun, 21 Feb 2010 22:20:08 +0000

Line of reporting is one thing. Who pays the piper is another.

I work in IA these days. My boss reports to AC *and* MD. But the MD decides the size of his salary & bonus, not the board’s remuneration committee (and they *do* have one…)

By: Deb

Deb — Fri, 19 Feb 2010 06:54:07 +0000

Ref. Chicago Accountant Oct. 31, 11:39: “Why employ a team of people that will only work half the year?…You aren’t abdicating responsibility by hiring an accounting firm to do the exact same thing an internal team would do.”

Veering a bit away from the purely regulatory issue, may I suggest that ‘internal’ auditors these days are not only supposed to ‘deliver’ audits/ICFR reviews via a checklist-based approach, but are expected to do much more. A transition from purely compliance/transaction-based audits to successively more robust risk-based audits is quietly underway at many organizations – in fact, this is one of the euphemistic ‘best practices’. While IAs have been factoring in business risk into their audit scoping process since quite some time now, they are now also expected to vigorously contribute to (and, in many cases, spearhead) the enterprise risk management initiative, being perhaps best placed to do so given their wide-angle view across organizational hierarchies and boundaries. And this is a much more sustained campaign, beyond individual audit assignments, dependent to a large extent on building lasting relationships with the process owners across business functions, not only Finance.

As such, may I submit that an outsourced accounting firm cannot really be expected to “do the exact same thing an internal team would do” and, as such, the apprehensions to “employ a team of people that will only work half the year” are totally unfounded.

By: Francine McKenna: The Great American Financial Sandwich: Goldman Sachs, PricwaterhouseCoopers LLP and AIG | Deconstructing The News

Thu, 04 Feb 2010 20:22:25 +0000

[...] AIG, those managers such as Cassano not affected by Crisis One head chopping, were still in place, and the derivatives business largely [...]

By: Francine McKenna: The Great American Financial Sandwich: Goldman Sachs, PricwaterhouseCoopers LLP and AIG

Thu, 04 Feb 2010 19:47:43 +0000

[...] AIG, those managers such as Cassano not affected by Crisis One head chopping, were still in place, and the derivatives business largely [...]

By: re: The Auditors » Blog Archive » The Great American Financial Sandwich: AIG, PwC, and Goldman Sachs

Tue, 02 Feb 2010 15:24:54 +0000

[...] AIG, those managers such as Cassano not affected by Crisis One head chopping, were still in place, and the derivatives business largely [...]

By: re: The Auditors » Blog Archive » Auditing Standard 5: How Now, Brown Cow?

Sun, 27 Dec 2009 18:40:09 +0000

[...] Under AS No. 2 the audit firms interpreted the standards very strictly. They continued to do so for as long as possible under AS No 5. This was partly due to their desire to do as much work and reap as much of the fee as legally possible, the “share of the wallet” concept. This was also due to concerns about liability. Finally, in early 2008, their clients, pressured themselves by the economic downturn, took the upper hand. The auditors’ ability to fight the scope reduction demands was limited by economic reality and losses of clients due to failures, takeovers, and the bailouts. They started to cut their overbloated rolls and then were hard pressed to push for more given staffing constraints, especially in the IT audit arena. [...]

By: re: The Auditors » Blog Archive » Wherever You Go, There You Are…

Mon, 04 May 2009 00:24:36 +0000

[...] The focus is on two case studies, AIG and Société Générale. [...]

By: Sam E. Antar

Sam E. Antar — Mon, 03 Nov 2008 04:58:00 +0000

As the criminal CFO of Crazy Eddie, I never feared any auditors, whether they were internal auditors or external auditors. I did not fear Audit Committees, too.

I feared government agencies, like the FBI and SEC. However, the FBI and SEC of today are overwhelmed and under-resourced.

Therefore, if was still a criminal, I would no longer fear the FBI and SEC today.

A perfect storm is forming.

Get ready!

By: Krupo

Krupo — Sun, 02 Nov 2008 22:46:00 +0000

Hey indie-acc, I’ll have to scan through those posts.

The textbook basically delivered the GE-line, “very complicated transactions,” “no one could really understand,” all done by a whiz-kid without anyone else’s knowledge sort of thing.

I might still have it sitting around somewhere, I’ll have to see if I have it (or if I sold the book).

By: Chicago Accountant

Chicago Accountant — Sat, 01 Nov 2008 18:03:00 +0000

@Anon 10:56

What if the engagement was 100% insourced and the CAE said, "this can't be, move it to yellow or you're fired"? Would you have changed your results? Again, insource, outsource, it doesn't matter. All that matters is you have a strong CAE and a resolute audit committee.

You have profit seeking accounting firms and you have profit seeking companies with insourced internal audit functions. It's all a wash.

If you want change, you need to take a strong look at the regulatory structure and legal repercussions.