Posts Tagged “Big4”

According to a new study of more than 1,600 chief audit executives (CAEs), senior management and board members released by professional services specialist PwC yesterday, internal audit functions that have very effective leadership perform better and add greater value to their businesses.
The Big 4’s study found that more than 50% of participating stakeholders now believe internal audit is contributing significant value to the business.This is a significant increase on the same study conducted last year. It is also hoped that internal auditors will add considerable value and leadership within a company in the 5 years after joining.

The value of leadership

There is close correlation between strong leadership and internal audit’s ability to add value and deliver high performance,To continue fostering internal audit functions to become more trusted advisors within their organizations, stakeholders should promote strong internal audit leadership while audit executives work to elevate the performance and perceptions of their respective functions.

PwC also identified five characteristics consistently exhibited by the most effective internal audit leaders that all CAEs should adopt:

1)
Create and follow through on a vision.
PwC found that very effective internal audit leaders possess a strong vision that aligns with both a company’s strategic direction and stakeholders’ expectations. These leaders translate their visions into strategic plans and invest in capabilities in support of their vision, especially data analytics and technological tools that allow them to innovate on process.

2)
Source and retain the right talent.
According to PwC’s study, CAEs identified talent shortages as the most significant barrier to increasing their contributions as leaders. Additionally, as business transformation continues to evolve, additional new skills are needed. PwC says the most effective internal audit leaders exhibit two talent behaviors that stand out from the pack: a focus on mentorship and talent development, and an ability to source the right talent when needed.
PwC says very effective internal audit leaders also have a “no hierarchy in the room” policy, which facilitates staff development through open discussion and working as a team to solve problems. Fully 73 percent of these leaders use co-sourcing as part of their talent strategies.

3)
Empower the internal audit function.
Organizational position and the support of stakeholders plays an important role in the effectiveness of internal audit leaders. PwC found that 78 percent of very effective internal audit leaders are vice presidents or hold senior positions in their organization. Additionally, PwC found stakeholders are gravitating toward more senior leadership talent to fill the CAE role, noting their responsibility to empower the CAE by setting a culture that supports the importance of a strong control environment.
Demonstrate executive presence. Underscoring the need for leadership talent in the CAE role, PwC found that 90 percent of very effective internal audit leaders excel in demonstrating executive presence. They bring bold perspectives and think broadly about the company. PwC notes that internal audit leaders must inform, educate and influence stakeholders as well as earn their trust. One of the trickier challenges internal audit leaders face is communicating with a variety of internal and external stakeholders who each have different expectations of the function.

4)
Partner with the business in meaningful ways.
The most effective internal audit leaders set themselves apart by partnering with the business in meaningful ways. PwC says internal auditors should be able to stand out in three specific behaviors to become a very effective leader:
Develop relationships built on trust.
Build partnerships across the lines of defense to play greater roles in coordinating risk management across functions.
Use those connections to raise their level of engagement across the organization, taking on leadership roles in working with management, compliance, legal and other assurance functions to develop an integrated assurance strategy.
PwC notes that some very effective internal audit leaders have taken to renaming the internal audit function (e.g., to audit services) to rebrand it as a collaborative functions that partners with the business.

5)
Seeing clear and strategically
“It’s through close alignment with various stakeholders and owning internal audit’s role as a leadership function within the organization that can allow internal audit to help their companies keep up with the changing business and risk landscape,” Pett said. “But all this can’t be said and done without a clear vision, supported by a strategic plan and enabled with top talent.

For the full article click http://www.cio.com/article/3042157/leadership-management/5-characteristics-of-exceptional-internal-audit-leaders.html

Economic and political uncertainty fused with volatility, regulatory compliance, and operational risk continue to cause major angst among global audit committees, a survey bu Consulting giant KPMG has revealed.
The survey of over 1,500 audit committee members across 36 countries exposed that for the second successive year, respondents reported that they found it “increasingly difficult” to oversee major risks in addition to financial reporting.

Three out of four respondents said the time required to carry out their audit committee responsibilities had risen significantly (24%) or moderately (51%), while half said the role was increasingly difficult given the committee’s time and expertise.
In addition to financial reporting members of the committee admitted overseeing further risks such as cyber security

Tim Copnell, chairman of KPMG’s UK Audit Committee Institute, said: “The resounding message is that the audit committee can’t do it all. Overseeing financial reporting and audit is a major undertaking in itself, and the risk environment is clearly straining many audit committee agendas today.”

It is reported that Deloitte LLP may be obstructed from auditing companies in Saudi Arabia after the country’s market regulator communicated to firms registered in the kingdom to stop using its local services, according to reports.
The Capital Market Authority stated in the circular dated Nov. 27 that publicly traded companies it regulates should avoid working with Deloitte’s Saudi Arabian practice as of June 1. The ban could be revoked if Deloitte resolves a dispute the regulator didn’t specify. The matter relates to Deloitte’s audit work for a construction-industry services provider based in Dammam, Saudi Arabia.
The kingdom, the largest Arab economy, is tightening rules on corporate governance as it plans to open its $500 billion stock market to foreigners next year. The CMA, as the regulator is known, last month initiated a probe to determine if Etihad Etisalat Co. violated rules after the telecommunications company blamed auditing errors for a drop in profit that led to a stock market sell-off.
“It seems clear that the CMA is cracking down on auditing standards as it prepares for the opening of the stock market to foreign investors next year,” Shrouk Diab, assistant vice president of research at NBK Capital exclaimed.
Deloitte operates in the kingdom as Deloitte & Touche Bakr Abulkhair & Co., and has had a practice there for more than 50 years, according to its website. It audits 35 listed companies in Saudi Arabia.

For jobs with some of the leading international consulting firms across the world as well as tier one multinationals, please contact Audit International on 0041 4350 830 95 or else email your current cv to info@www.audit-international.com

Audit International has learned that for Auditors and best practices, rotation is key!  For publicly traded companies, the audit process is among the more arduous and mundane of all corporate responsibilities.

It claims the precious time spent and attention of senior management and executives and is neither strategic nor contributory to company profits or shareholder value. And in the Sarbanes-Oxley era of more regulated corporate governance—in the wake of Enron, MCI WorldCom, and other such scandals—the audit process has only grown in intensity, prompting an exodus of senior in-house accounting and financial executives to private companies.

But despite the enhanced governance requirements of the last ten years, audit quality continues to slip. The Public Company Accounting Oversight Board is still finding deficiencies in audits conducted by the Big Four. In a recent Wall Street Journal article, the chief auditor at the PCAOB stated, “When we look at an audit, the rate of failure has been in a range of around 35 to 40 percent.”

 

Competition in the audit market has all but disappeared. In the U.K., the Big Four accounting firms hold the auditing business for 99 percent of FTSE 100 companies. In the U.S., those same four companies collected over 94 percent of all auditing fees in 2010.

In the interests of improving audit quality, preventing against early 2000s-style corporate scandals and protecting the investor, regulatory authorities across the globe are looking at both the audit market and the relationship between company and auditor and are putting in place mandatory audit rotation. That is, a legal requirement that companies put up for tender and potentially change their auditor every number of years. The EU has already enacted such regulation, requiring most companies to put their audit business up for bid every 10 years. And there is a growing clamor for similar regulation in the U.S.

We will have to wait and see if this regulation improves the working life of internal auditors.

 

For jobs with some of the leading international consulting firms across the world as well as tier one multinationals, please contact Audit International on 0041 4350 830 95 or else email your current cv to info@www.audit-international.com