He found there was a large element of ‘ land grabbing ’ going on by different departments . “ There was quite a lot of internal tension about who got what and I can see that
happening under MiFID II as well ,” he says .
“ I saw it particularly with the compliance people who have had constantly increasing salaries for the past 10 years and then started to feel a bit threatened by the rise of internal audit . As a result we have seen some senior compliance people positioning themselves more as COOs .”
RISE OF THE BEAN COUNTER
He believes the question of whether internal audit departments can truly be independent is one pushed by vested interests : “ I think the people that are going to push the ‘ independence agenda ’ are the accountants ,” he argues .
“ There is a criticism to be levelled at quite a lot of EU legislation that it just creates more jobs for the accountants . You may well see accountants running around saying ‘ you need us to help build your internal
THE LEVEL OF RECOMMENDATIONS THAT THE INTERNAL AUDITORS MIGHT MAKE IS GOING TO DEPEND ON HOW YOU SCOPE THE ENGAGEMENT …
PAUL ANDERSON , HEAD OF FINANCIAL REGULATION ( UK ), SQUIRE PATTON BOGGS audit function and you need us to be appointed to do it because your internal people can ’ t have sufficient credibility and independence ’.
“ The level of recommendations that the internal auditors might make is going to depend on how you scope the engagement , and that ’ s another area which the accountants are good at – ‘ scope creep ’.”
David Haylor , director of Internal Audit Connections , which specialises in internal audit and risk recruitment , suggests that given the highly regulated nature of this area of industry , it is even more important that audit / risk teams fully understand the risks to an organisation of getting this wrong .
He advises that an organisation ensures it has an experienced audit and risk committee who are willing to both challenge and back the new teams .
“ Ensure the new head of audit and risk has a strong reporting line to the non-executive chair of the audit and risk committee , and that this chair has a strong voice on the board ,” he says .
“ Without this it can be very hard to demonstrate independence of the function .” He warns that one of the greatest mistakes made when establishing a new function is forgetting the cultural element , meaning the support from the business for a newly formalised culture of audit and risk .
“ Any team with no support , or even hostility , from the business and receiving lip service support from the board will fail from day one ,” he explains .
“ You cannot just set up a function , you need to clearly communicate , on an ongoing basis , why this is necessary and of real value to the organisation . The ability to communicate this should be a key competency
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