Head Of Internal Audit

The audit profession may be considered one of the most esteemed in the business, which requires higher education and a way scrupulous work. An internal auditor must know the inner workings of the client's business to the extent that he or she can perform quality work. However, what is that? The closest is an auditor for the daily operations and staff, more knowledge can be acquired from the company. Therefore, the work is more thorough. But what about the objectivity and independence? There is a compromise between the familiarity and neutrality. It is hard not to blur the line. However, it is a challenge for the accounting profession, and many have crossed the line.

One of the most infamous corporate scandals of the 21st century includes a breech of ethical standards and fiduciary responsibility. The relationship between Enron and Arthur Anderson, has won its place in the accounting profession Hall of Shame. Enron was once the leader of the power industry. Arthur Andersen was Enron both external and internal audit organization. It is a conflict of interest from the beginning. In addition, Enron management and the leaders of Anderson's audit team has violated the independence and objectivity of socialization on a regular basis. Enron was one of the largest customers Arthur Anderson. With fees in excess of 100 million dollars, Anderson had a lot to lose by dropping Enron as a client. In return, Enron's questionable business practices have been "forgotten" and signed off by auditors Anderson. This' I'll scratch your back, you scratch mine "situation had the two parties locked in a symbiotic relationship, which can be difficult to escape. Finally, after much litigation and negative publicity, Enron and Arthur Anderson, a Once a member of the "Big 5" have been stripped of their reputations and positions in the business world.

Another example of abuse of power is knowledge and the WorldCom scandal. Bernie Ebbers, former CEO of WorldCom significantly expanded its business in a state of the Fortune 500. Amid the decline of telecommunications in the late 1990s, while most components of the industry reported losses, WorldCom was announced profits. This was the first red flag. In fact, approximately 2 billion designated for a reserve of responsibility has been transferred to revenue. There were anonymous tips sent to the internal audit team, but the audit committee had no documentation for the questionable $ 2 billion. A total of $ 3.85 billion in expenses had been badly affected. Ultimately, the scandal whistleblower Cynthia Cooper was director of Internal Audit. She began to ask questions and "nose everywhere." It was bypassed by senior management and external auditors (at that time as well as Arthur Anderson). She decided to take matters into their own hands. His role as head of the audit prepared to recognize when things were wrong, mainly because of the daily experience with the company's operations and staff. Inevitably, she, with a small team, found the monster dollar 3.85 billion dollars. That said, Bernard Ebbers was sentenced to 25 years in prison for fraud and violation of securities laws.

The similarity of these two stories is that obviously people in charge should have been trustworthy, are not. The difference lies mainly in the strength of the internal audit team. In one case, the ambition overcame the virtue. In the other, the bravery and ethics rather the status quo. These should be the qualities of all business, but especially those of the audit profession.

The need for strong ethical organization of internal audit is becoming increasingly important.

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