While Internal audit and compliance have different objectives, they can gain much from working more closely together
If it seems like the lines between internal audit and compliance are beginning to blur a little, it's because they are. Many companies are leveraging both functions to do more to assess risks and asking them to weigh in on all the things that could go wrong at a company from regulatory violations to strategic blunders. They are also calling on both functions to do a better job of communicating with each other and coordinating their activities.
In this podcast, Joseph McCafferty, head of audit content at MIS Training Institute, talks with Michael Volkov, CEO of law firm The Volkov Law Group and author of the Corruption, Crime, & Compliance blog, about the convergence of internal audit and compliance.
According to Volkov, the functions must work more closely together and leverage the work of the other. "Compliance is an important aspect of a company's internal controls. An internal auditor is devoted to oversight and monitoring of a company's internal controls," he writes. "An effective compliance program requires periodic audits and assessments to ensure proper operation of the compliance program."
To him they go together like peanut butter and jelly or Ginger Rogers and Fred Astaire. "If you are a chief compliance officer, your natural partners are internal audit and the legal function," says Volkov. "Internal audit has various overlap in terms of function that can really enhance compliance."
"There is a lot they can do together and as I see compliance programs mature, I'm seeing a lot of interconnectedness or relationships with internal audit." Still, Volkov is hardly advocating for complete integration of the functions. He says they have distinct roles to play and need to preserve their independence, even as they work more closely together.
Among the places they can work more closely together, he says, are risk assessment and planning. "One of the first areas that internal audit can help is the risk assessment," he says. According to Volkov, there is a natural overlap and they can help focus and dig in and monitor problem areas. He says they can also help be each other's eyes and ears. "Internal auditors go on site on various offices, functions, and operations and there is no reason they can't be linked together with compliance people to build what I call a financial and compliance audit mechanism."
To hear Volkov's views on how internal audit and compliance can work more closely together and what they have to gain by coordinating their efforts more closely, click on the link below.
Length: 9 min. 55 sec.
size: 9.08 MB