With the rising cost of audit fees, companies need to find ways to cut costs. We recently had the opportunity to interview Leena Roselli, Senior Manager of Research at Financial Executives Research Foundation (FERF). And these are some of the findings she shared with us from their most recent comprehensive study.
The Sarbanes Oxley Act of 2002 called for major regulations that shifted the way companies did business and how auditors audited. This was a
key driver in raising the cost of audit fees. In fact, FERF began analyzing these compliance costs, and found that they were embedded into a
company’s overall audit fees. ..
Business Ethics always seems to be a hot topic. Where does one draw the line between right and wrong? Are corporations bending the rules to achieve greater profits? Internal Auditors have an obligation to detect fraud, but may not always have the best tools or support. Bruce Anderson, Chief Ethics Officer at Health Net gave us objective measures and insights on how to predict compliance risk surrounding ethics policy. Some highlights of our interview provided us with the top 4 areas where companies should focus their efforts when creating a world class ethics program. ..
What are some of the risks involved in engaging third party providers? Are you really saving money by engaging them? I recently had the opportunity to interview the Global Director of Internal Audit at Quiksilver, Nicole Ungaro. Here are some insights on the top 5 audit failures when reviewing and auditing your third party providers: ..
Video Blog: What did 1,600 Internal Auditors Say About their Jobs?
How satisfied are Internal Auditors with their careers? What are the factors that make the difference? In an in-depth study of 1,600 Internal
Auditors, Business and Economics Professor, Venkat Iyer from UNCG found out quite a bit about what makes them tick. We had an opportunity to
interview him recently and here are some of the highlights of his findings.
Organizational Identification and Company Pride
Internal Auditors identify with their companies in the same way that fans identify with their favorite sports team. For example, if their company
is on the top 100 employers list, they feel a sense of pride and that makes them happy coming to work every day. By the same token, if their
company is in the news for illegal or unethical behavior, they’ll want to hide under a rock.
Internal Auditors, or for that matter, all employees want to know that they are making a difference. They need to be able to see the impact of their work product on the company, whether that be in the bottom line of sales, or seeing a new policy implemented because of their recommendations. They need to know that they are adding value.
Mentoring, Training and Promotions Lead to Job Satisfaction
Respondents of the study said that their job satisfaction increased when they were mentored and trained by more senior staff. If they felt that the company cared enough about them to invest in mentoring and training programs, they
became much happier and more loyal employees.
In addition, when the Internal Audit function was used as a training ground for management, this had a big impact on
job satisfaction. Furthermore, when an employee’s work was recognized and they received a promotion, this lead to even greater happiness at
work.
Independence and Direct Line to Audit Committee
When Internal Auditors were given the tools and “environment that supports their autonomy,” they were much more satisfied with their jobs.
Not having pressure from management to reach a certain conclusion, rather being given a goal of cost savings, for example, lead to a more pleasure
at work. Also, reporting directly to the Audit Committee, rather than management, was also very important to Internal Auditors. Internal Auditors
need to be able to be at able to present to the Board and Executives. Many organizations are beginning to shift toward this model.
OPC - Organizational Professional Conflict
In 1984, there was a study done by The Accounting Review, called “A Reexamination of Accountants' Organizational-Professional Conflict.
Venkat’s study confirms this older study in which Internal Auditors feel conflict between the profession’s standards and pressure from superiors.
When Auditors get pressure, even very subtle, to operate according to the company’s norms, which might seem to conflict with auditing standards,
they feel dissatisfied with their jobs. Organizations need to allow Internal Auditors to operate according to the standards of the profession.
For example: Standards say companies MUST do a Quality Assessment Review every 5 years. Often companies do this in-house, which is a mistake.
Sometimes there is miscommunication between how to apply the Standards. Venkat believes that the key is for management to understand how Internal
Audit HELPS the organization.
Surprises in the Study
Most Internal Auditors receive bonuses over and above their salary which is tied to company profits. In fact, the study revealed that 70% of
those who work in publicly traded, as well as private companies receive bonuses.
Millennials and their Views of Their Employers
With more millennials in the workplace, companies need to find ways to keep them satisfied. They often have very different view about their
work life than previous generations. In fact, a White House study says
they are now the largest and most diverse group in the U.S. So it is imperative that companies address their needs and wants.
We invite you then to learn more about our Compliance Resource Analysis or by emailing us at: Info@avivaspectrum.com to start the conversation.
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More about Venkat Iyer
Venkat specializes in organizational and behavioral issues in audit firms and the internal audit profession. He began his career at UNCG’s Bryant School of Business and Economics in 1999 as an Assistant Professor. He earned his Ph.D. in Business Administration from the J.M. School of Accounting at the University of Georgia, in Athens Georgia. He is a CPA and has many notable publications and honors, including the Teaching Excellence Award from the Bryan School at UNCG in 2005. He also received research grants from Big 4 Firms, such as KPMG, PWC, and the IIA Research Foundation. Copies of the full report may be purchased on the IIA’s website for $25, and is free to members.
