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IIANZ Board member and Chair of its Advocacy Committee
by James Jong
Board Member and Advocacy Committee Chair
Institute of Internal Auditors New Zealand
The Institute of Internal Auditors NZ is proud to partner with Transparency International New Zealand to raise awareness of, and demand for, effective internal audit functions in New Zealand as a means of maintaining strong integrity systems.
We share the view that internal audit is a key pillar of organisational governance. In turn, effective governance is a critical component of transparency and accountability, which are integral for maintaining trust and confidence. Organisational leaders and stakeholders should ask whether they are making the most of their internal audit functions.
Why is this important?
Organisational integrity is often dictated by the tone at the top. It doesn’t matter whether it is a small family business, large multinational conglomerate, state service agency or political movement. Leaders tend to exemplify acceptable behaviour – good, bad or indifferent. In first-world jurisdictions such as New Zealand, the public can rely to a large extent on the checks and balances of regulatory bodies and law enforcement authorities. But these are often activated after something has gone wrong. It might take a public complaint, a whistleblower on the inside, or a leaked document. Mostly, the damage is already done.
Transparency and accountability are rarely absolute. For some, it may be more about window-dressing and passing the buck. When that happens, whose job is it to call that out? Governors and board directors certainly have a key role in this responsibility. But they are generally not in the business to get close enough to see what’s really going on. Managers are in the business but they are often constrained by reporting hierarchy. Unless they risk breaking the law, many managers will find it easier to do as they are directed by their bosses. Who is left as the voice of organisational conscience?
A clear option is the internal audit function. Those established under the professional standards of the Institute of Internal Auditors will recognise the imperative to enhance and protect organisation value by providing risk-based and objective assurance, advice and insight. It sounds very promising. But like your own conscience, how much consideration you give the internal auditor depends on a few key factors.
Do you demand voice for organisational conscience and how do you value the scrutiny and frank advice of the internal auditor?