“A crisis of the magnitude of COVID-19 exposes many of the internal issues that have been swept over, and worrying information about a firm’s culture that has not been taken seriously or simply ignored,” she said.
“When risk, compliance or internal audit budgets are under pressure, there is a lack of investment in systems, high quality people resources and their professional development.”
On internal auditing, Professor Sheedy reckons it “can just smell bad” if a consultant is also doing other work while acting as internal auditors at the client.
Internal auditors are the experts who ensure the non-financial systems within a company operate as expected.
“To me, the amount of outsourcing of internal audit that goes on is surprising,” she said.
“There’s obvious advantages in having an internal function so someone who is employed in the company is doing the work and has a stake in its long-term success.
“The problem with an outsourced party is that they don’t bring the same commitment to the company, they are going to cut corners, they are going to try to keep their costs down and they don’t really know the culture.”
The independence of Ernst & Young was questioned earlier…
