Episode 6 | Skepticism and the Internal Auditor
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With their daily presence inside a company and their constant focus on internal controls—internal auditors are in a uniquely strong position to help deter and detect financial reporting fraud. But to enhance their effectiveness, they should adopt an attitude of professional skepticism. In this fast-moving webinar, we listen in as experienced audit committee chair Michele Hooper discusses skepticism with Richard Chambers, president and CEO of The Institute of Internal Auditors, and Paul Sobel, vice president and chief audit executive of Georgia-Pacific and 2012-2013 senior vice chairman of the board at The Institute of Internal Auditors.
For internal auditors, skepticism means being intellectually curious, confirming verbal representations with evidence, and having a “mindset” that recognizes the possibility of fraud always exists. Of course, for internal auditors, applying skepticism in their daily activities requires a level of tact and developed skill.
State-of-the-art internal auditing requires an attitude of respectful independence from management. ‘Trust but verify’ is a way of expressing it.. Having frequent, candid dialogue with executive leadership and support from the board and audit committee are critical. Leveraging resources such as the COSO Internal Control Framework, attending training and conferences, pursuing certifications and networking with peers can help. And for growing organizations with complex needs, co-sourcing, staff rotation, and guest auditor programs can help meet the need for an engaged, yet independent, internal audit function. All of these tools, in combination with skepticism, can make a vital difference over time to help deter and detect financial reporting fraud.
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
The Institute of Internal Auditors
Richard Chambers is responsible for driving the profession and the many undertakings of The Institute of Internal Auditors (IIA). Working from IIA Global Headquarters in Altamonte Springs, FL, Chambers advocates for IIA members in 165 countries. Chambers actively heads The IIA Global Headquarters’ leadership team in developing the global business infrastructure and framework that supports The IIA’s chapters and institutes around the world and advances the organization’s strategic priorities. As the spokesperson for the internal audit profession, Chambers is a visible presence on behalf of The IIA’s membership. He leverages 36 years of internal audit and related experience to challenge internal auditors to think more deeply about how they view their roles and what they can do within their organizations to build and preserve stakeholder value. He also has championed high personal and professional standards for internal auditors around the world — even in developing countries — and his ideas and opinions frequently have been covered by the media.
Michele J. Hooper serves on the NACD board of directors and on the boards of PPG Industries, Inc. and UnitedHealth Group. She chairs the audit committee for PPG, and the Nominating and Governance committee for UnitedHealth Group. She is also co-chair of the CAQ Working Group focused for the Deterrence and Detection of Financial Reporting Fraud. Ms. Hooper previously was a board member of Target Corporation, AstraZeneca PLC, DaVita Corporation, and Seagram Company Ltd. She is President and CEO of The Directors’ Council, which specializes in corporate board of director recruitment.
Paul Sobel is vice president and chief audit executive for Georgia-Pacific, LLC. He also serves as the 2012-2013 senior vice chairman of the board at The Institute of Internal Auditors. He previously served as the Chief Audit Executive (CAE) for three public companies: Mirant Corporation, an energy company based in Atlanta, GA.; Aquila, Inc., an energy company based in Kansas City, MO.; and Harcourt General’s publishing operations based in Orlando, FL. His responsibilities included leading the global internal audit efforts at these companies, as well as consulting on each company’s ERM, compliance and internal controls programs. He has also served as International Audit Manager for PepsiCo, Senior Manager in Arthur Andersen’s Business Risk Consulting practice, and Experienced Manager in Arthur Andersen’s Financial Statement Assurance practice.
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