june 2017 27 Internal audItor
the Oregon Secretary of State’s Office, once worked for a
county government body where he conducted a performance audit that, he reports, unearthed a lot of problems.
The CFO he reported to didn’t want to ruffle any feathers,
but told him to proceed if he wanted to and the problems
would be fixed, but the report wouldn’t be issued. “I felt
like my standing fell and communications were superficial
from then on,” Memmott says. The happy ending was that
the CFO departed soon after.
Mike Peppers, on the other hand, reports he has not
“been in a situation in my 25-year career where I’ve had
pressure to suppress something in a report.” The CAE at the
Austin-based University of Texas System credits that mainly
to his perception that public sector political retaliation “is
a little less likely because so much of what we do is public,
and it has been said that sunshine is the best disinfectant.”
Much of his output is public record, he explains, and audit
committee meetings are broadcast live on the internet. “My
colleagues in private companies have trouble wrapping their
heads around that,” he quips.
Peppers does, of course, recognize that political challenges exist. He recommends developing strong relationships
with audit committees so they “completely understand the
role of internal audit and realize the responsibility they have
to encourage an open and ethical environment.” That may
be in the agency’s or department’s charter, and if it’s not, the
CAE needs to drive it, he urges.
“CAEs need to recognize the important elements of
protection, and know their limits within them, so if a situation arises, they are prepared to have those tough conversations,” Peppers says. “The first conversation should
not take place when there’s a problem.” Similarly, auditors
should know the process for removing a CAE. “No one
would want to make excuses for a bad CAE,” he says.
“Any time a CAE needs to be removed, there needs to be
a strong process in place for the action to be reviewed in
the sunshine to make certain there wasn’t anything inappropriate” in how the termination was handled. While it’s
probably the audit committee’s responsibility to ensure
that’s the case, new internal audit hires should make sure,
when they come into the role, that the process is clear.
Auditors who’ve been burned by political pressure
agree. “It starts in the interview process,” the county-level
school district auditor says. “I wasn’t told the truth when
One of the top reasons 76% of public sector auditors do not audit culture is because of
lack of support from executive management, according to The IIA’s 2016 Global Pulse of Internal Audit.
“They forbade me
to do any work,
and things have
been at a standstill
for six months.
I think most internal
auditors in my
have already quit.”