Internal Auditors Confront Ethical Pressures

By Michael Cohn, Accounting Today

Nearly one out of four internal auditors around the world face pressures to either suppress or change their audit findings, according to a new report.

The report from the Internal Audit Foundation draws from a survey by the Institute of Internal Auditors of more than 14,500 internal auditors from 166 countries.

Internal auditors are more likely to face pressure as they ascend through the management ranks at the companies where they work, the report found. Twenty-nine percent of chief audit executives experienced occasional or frequent pressure, compared with 20 percent of staff-level internal auditors.

Lower-level employees were more likely to decline to answer the question of whether they felt pressure to suppress or change their audit findings, which the report’s author suggests could include some respondents who felt intimidated. Fourteen percent of staff declined to answer the question, while only 5 percent of chief audit executives did. When the two percentages are combined, the resulting “pressure score” was fairly consistent for all four employment levels, between 34 percent and 38 percent.

Many organizations, especially in the public sector, lack organizational codes of conduct or ethics, and many internal auditors receive little or no training in the IIA’s Code of Ethics. The report found some regional differences in various parts of the world. Sixty-nine percent of respondents reported their organizations have a code of ethics, with the lowest rate, 60 percent, in the East Asia and Pacific region.

“Internal auditors do not always operate in environments that foster ethical approaches, and many organizations do not have codes of conduct or codes of ethics to support them,” said IIA president and CEO Richard F. Chambers in a statement. “Frameworks that promote desired behavior are crucial to building ethical corporate cultures, which demonstrates a clear need for all internal auditors to adopt the IIA’s Code of Ethics to help guide performance when they face ethical pressures.”