Internal Audit's Role in Corporate Governance

The International Professional Practices Framework (IPPF) is the conceptual framework that organizes authoritative guidance promulgated by The Institute of Internal Auditors. The IPPF guidance includes mandatory guidance, which includes the Definition of Internal Auditing, the Code of Ethics, and the Standards.

With respect to Governance Standard 2110, "the internal audit activity must assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives:

• Promoting appropriate ethics and values within the organization;
• Ensuring effective organizational performance management and accountability;
• Communicating risk and control information to appropriate areas of the organization; and
• Coordinating the activities of and communicating information among the board, external and internal auditors, and management."

Earlier in 2010, Boundless LLC asked Paul Washington, Chair for Society of Corporate Secretaries and Governance Professionals and the Corporate Secretary and Deputy Counsel for Time Warner how Internal Audit should be involved in assessing and making recommendations regarding board composition and governance structures, and his view was that "The board is not immune to internal audit and it is appropriate for Internal Audit to assess the rigor around board structure and processes." This can truly be the starting point for internal audit to understand the culture and the "tone at the top." While auditing the Board may be easier said than done, we must appreciate the fact that this is part of our professional obligation as such we need to communicate this to our Boards to engage in candid and constructive dialogue with key stakeholders.