Going Beyond Risk Levels

Posted on Jul 20, 2014

Some are satisfied with knowing whether the level of a risk is high, medium, or low. I think a far better assessment, one more attuned with running the business, is whether the risk is at an acceptable level. 

continue reading...

Time for Internal Audit to Graduate

Posted on Jul 14, 2014

The audit committee is charged with oversight of financial reporting, the external auditor, other financial risks, and sometimes but not always enterprise risk management. 

continue reading...

A Whistleblower Line Is Not Enough

Posted on Jul 7, 2014

Surveys show that most frauds and other inappropriate acts are discovered through tips, such as through a whistleblower line. 

continue reading...

The State of Internal Audit

Posted on Jun 28, 2014

We have some recent surveys and reports on this topic. Thomson Reuters, a software vendor that has provided internal auditors with audit management solutions for many years (formerly known as Paisley), has published State of Internal Audit report 2014: Adapting to Complex Challenges. Grant Thornton, a CPA firm, shared the results of their CAE survey, Adding internal audit value: Strategically leveraging compliance activities

continue reading...

Trust May Be the Enemy of the Board

Posted on Jun 21, 2014

I first heard the expression “noses in, fingers out” from Don Sparks many years ago. He was referring to the idea that board members need to ask probing questions and challenge the executive team, but not get so deep into decision-making that it appears they are trying to manage the organization themselves.

continue reading...

Considering the Governance Committee of the Board

Posted on Jun 16, 2014

The Canadian Institute of Chartered Accountants (CICA) has published a number of guides for Directors. One is 20 Questions Directors Should Ask About Governance Committees (published in 2010). 

continue reading...

Reflections on Corporate Culture After the GM and VA News

Posted on Jun 7, 2014

Yesterday (June 6th), I was called by a reporter for the Wall Street Journal to discuss what had been reported about the “old GM” culture. Apparently, defects in that culture led to employees and managers failing to take responsibility for an ignition switch problem that is blamed for the deaths of 13 people over 11 years or more, and failing to inform top management and the board. Eventually, 2.6 million vehicles were recalled, the federal government is conducting an investigation, and 15 employees have been fired following an internal investigation led by Anton Valukas (see the report here). (Note: Anton Valukas was responsible for investigating the events that led to the Lehman Brothers bankruptcy.)

continue reading...

Board Oversight and Insight

Posted on May 30, 2014

I see the board providing two broad areas of value to an organization and its owners: oversight of management, providing assurance to the owners and other stakeholders that management is running the organization effectively and in the interests of those stakeholders; and, insight – helping the management team with the selection of strategies and their execution that create value.

continue reading...

The Risk of Judgment Errors in Financial Reporting

Posted on May 24, 2014

Our friends at Deloitte have shared their insights on a “framework” for ensuring that organizations minimize the risk of exercising poor judgment where called for in accounting and financial reporting.

continue reading...

Talking Sense about COSO 2013 and SOX

Posted on May 16, 2014

Congratulations to Financial Executives International (FEI, one of the sponsoring organizations behind COSO) and its Accounting Policy Analysis and Communications Director, Edith Orenstein. 

continue reading...