What to do when a fraud is discovered in the company? What if those involved are from the top? Austrian Angela Witzany, vice president of the Global Institute of Internal Auditors and one of the leading experts on the subject, was in Brazil recently and spoke to DINHEIRO about the challenges of combating deviations in corporate conduct, an expensive topic in these car wash times. .
What is the best way to fight fraud in companies?
This practice must be discouraged. The main mechanism for preventing fraud is to have effective and efficient internal controls, in which the internal audit assesses the processes.
What is the real role of internal auditors?
The International Structure of Professional Practices defines internal audit as an independent and objective consulting activity, designed to generate value and improve an organization’s operations. For this, risks must be properly managed.
What are the most common mistakes made by these professionals?
A common mistake is the lack of knowledge about the company. Internal auditors fail to be experts in all areas of the organization. Therefore, staff training is essential for the success of an internal audit. Another common mistake is not to strictly follow the actions defined between the audit and the management. Assuming that management is fully supporting their role, auditors must demand that actions be carried out on time and clearly define the consequences when they do not.
How to guarantee independence for internal auditors?
Allowing internal audit to access all company information is the key to this independence. The audit reports are forwarded to the management and the audit committee, which must demand that this autonomy exists. The auditor’s unrestricted access must be approved by management as a clear rule, as well as the definition of the procedures adopted in case of irregularities. This helps to make clear what safeguards protect the internal auditor and, in particular, the position of the head of internal audit.
Understand the difference between Internal Audit and Compliance, by Ibraim Lisboa
When detecting fraud, who does the auditor use within the company?
The approach depends on the culture and behavioral ethics established in the company and, above all, on the relationship that the head of internal audit has with the executive board. When anti-fraud operations involve senior management, they become an enormous challenge for auditors. We must not forget that, although auditing is an independent function within the organization, all internal auditors are employed and paid by the company.
Can internal audit be stifled by the company’s management?
The key point is the communication channels within the organization, which will guarantee the auditor’s freedom. But internal auditors also need to have an attitude in the organization to gain their authority and be heard.
What is the responsibility of the internal auditor when there is a scandal?
The internal audit must have responsibilities clearly defined by the company’s management. From my experience, my advice is that auditors should always be brave and tell the truth in all situations.
Are external audits allies or enemies of the internal auditor?
The primary responsibility of the external auditors is to review the financial accounts, while the internal audit reviews the entire organization. They can benefit each other from sharing information. However, internal audit must be willing to challenge the statements of the external auditors. In addition, the purpose of internal audit is to deal with potential risks before external auditors detect them in their annual assessment of financial accounts.
Understand the basic differences between internal audit and external audit
What lesson can Austria, an international benchmark in auditing and transparency, teach the corporate world?
It is the need to create codes of conduct with ethical and standardized rules for companies and their employees. In Austria, this exists in almost all public and private organizations.
Brazil is experiencing a time of several corporate scandals, in the public and private sectors. What is your view on what happens in the country?
The situation is quite complex. Unfortunately, I am not familiar with many details of the situation that occurs in Brazil. Therefore, I cannot comment on the topic now.
