When I saw the headline ‘Where was MinRes’ internal audit?’ on page 2 of the AFR this morning, I couldn’t help but think of Oscar Wilde’s quote…
“There is only one thing in the world worse than being talked about,
and that is not being talked about”.
It is not often that internal audit and its important third line assurance role gets top billing in the prestigious publication.
The piece is about Mineral Resources’ governance and uses internal audit as an avenue to question its governance practices. Perhaps MinResources would not agree with Oscar.
At its heart the article raises the important question for all company directors – how are you enabling your internal audit function to be an effective third line of assurance?
After all, it is the board who is accountable for the governance framework of the organisation and directors need to know the value internal audit can bring when empowered.
While we had nothing to do with the substance of the article, IIA-Australia was asked about the role of internal audit and we are quoted. The article refers to the Global Internal Audit Standards and how the internal audit function’s structure can aid objectivity and independence in the flow of information. So far so good.
But there are two errors. It says that ‘under the new standards, an outsourced IA function must be headed by the CAE, this must be an employee of the company’. As you know the CAE can be in-sourced or out-sourced. And, I was also misquoted as saying that the ‘draft ASX corporate governance principles and guidelines suggest that best practice would be for MinRes to appoint an in-house chief audit executive….’.
What I said was… ‘…common practice for an organisation the size of MinRes, following the new Global Internal Audit Standards (as suggested in the draft ASX principles and guidelines) would more likely be, to have the Chief Audit Executive in-house reporting directly to the audit and risk committee with a functional reporting line to management – this allows for ease of access across the organisation and objectivity and independence in the flow of information. The in-house CAE would likely have a team, but importantly it is common practice to strengthen the team’s capacity and knowledge by co-sourcing with one or more external providers’.
While making light of the situation by quoting Oscar Wilde, I am conscious that IIA serves members who work in-house and outsourced, and the new Global Internal Audit Standards embrace the CAE being able to be either. This was our briefing, and it is regrettable that it was misunderstood. I have written to the journalist and the online version will be updated.
Looking at the glass half full, I agree with Oscar. While there is an inaccuracy regarding the in-sourcing or outsourcing of the CAE role, it is better to have directors and C-suite talking about internal audit in their organisations.
Trish Hyde
CEO, IIA-Australia