Internal Auditing Around the World
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Internal Auditing Around the World Building on Experience to Shape the Future Auditor VOLUME X TENTH ANNIVERSARY EDITION FUTURE May 2013 COSO updates Internal Control – Integrated Framework (New Framework) December 1977 January 2013 Passage of the Foreign Corrupt IIA issues revised IIA Practices Act (FCPA) Standards 1 September 1992 97 Passage of 1992 COSO Internal 13 7 Control – Integrated Framework 0 1 2 9 9 1 2 This page intentionally left blank 1 0 July 2002 2 2 ■ 0 Passage of the Sarbanes-Oxley Act 0 ■ Creation of the Public January 2011 2 Company Accounting IIA issues revised 2 Oversight Board (due International Professional to passage of the Practices Framework (IPPF) 0 Sarbanes-Oxley Act) 1 0 3 0 0 2 8 200 November 2003 New York Stock Exchange (NYSE) passes Section 303A requiring April 2010 listed companies to have an internal audit function Passage of UK Bribery Act September 2008 Significant bank failures occur February 2010 (e.g., Lehman Brothers) SEC requires disclosure of board’s role in board risk oversight process (Proxy Disclosure Enhancements) Notable Internal Audit Milestones FUTURE May 2013 COSO updates Internal Control – Integrated Framework (New Framework) December 1977 January 2013 Passage of the Foreign Corrupt IIA issues revised IIA Practices Act (FCPA) Standards 1 September 1992 97 Passage of 1992 COSO Internal 13 7 Control – Integrated Framework 0 1 2 9 9 1 2 1 0 July 2002 2 2 ■ 0 Passage of the Sarbanes-Oxley Act 0 ■ Creation of the Public January 2011 2 Company Accounting IIA issues revised 2 Oversight Board (due International Professional to passage of the Practices Framework (IPPF) 0 Sarbanes-Oxley Act) 1 0 3 0 0 2 8 200 November 2003 New York Stock Exchange (NYSE) passes Section 303A requiring April 2010 listed companies to have an internal audit function Passage of UK Bribery Act September 2008 Significant bank failures occur February 2010 (e.g., Lehman Brothers) SEC requires disclosure of board’s role in board risk oversight process (Proxy Disclosure Enhancements) TENTH ANNIVERsaRY EDITION • Internal audItIng around the World • i blank left page to permit right-hand start of Foreword Foreword Almost a decade ago, we published a book consisting of 13 “Performer Profiles” that highlighted the internal audit and risk management practices of leading international organizations. In that publication’s introduction, we expressed the hope that the book might serve as a “helpful and informative guide” to the internal audit profession at a point “when effective internal auditing is more essential to the interna- tional business community than at any time in history.” Somewhat unexpectedly, our project became an annual endeavor, thanks to positive feedback – not only from internal audit, but also from audit committee members, corporate directors, CEOs, CFOs and other executives and professionals. As we celebrate the 10-year anniversary of the Internal Auditing Around the World series, it also appears clear that effective internal auditing is far more essential to global companies than it was in 2005. Our initial Internal Auditing Around the World installment began by describing internal audit as a genuine business profession characterized by, among other qualities, a dedication to its craft, a set of standards and ethical guidelines, and continuing professional education. Subsequent editions honed in on the profession’s innovative use of technology, its rising visibility throughout the organization, the ways in which it adds strategic value and its integral role in fostering enterprise risk management, among other themes. Last year’s volume documented how internal audit functions were taking the lead in fostering more meaningful collaboration and deeper levels of trust with boards of directors, C-level executives and the rest of the business. Although it is tempting to describe the evolution of internal audit functions documented throughout the previous nine Internal Auditing Around the World installments as a “transformation,” doing so would be only partially accurate. While the profession’s development in the past decade qualifies as dramatic, it is hardly shocking. The internal audit function’s growth from a tactical contributor to a genuine strategic business partner has progressed in an intentional fashion under the guidance of The Institute of Internal Auditors (IIA). The growing influence of The IIA can be seen in the expansion of its membership from 114,775 in late 2005 to 189,200 by the end of 2013. Through the single, global nature of its Standards, as well as its comprehensive research of current and emerging business and internal audit issues, The IIA shapes and guides internal audit in a way that sets the profession apart from all others. The International Standards for the Professional Practice of Internal Auditing engender quality and consistency for global internal audit functions; yet, the Standards also contain flexibility and adaptability that have served the profession extremely well in its evolution during the past 10 years. This guidance and service reflect The IIA’s legacy of strong leadership. We’re honored to be associated with The IIA’s nurturing of the profession. We’re also honored, as shown on the following Acknowledgements page, that so many internal audit executives from the world’s leading organizations have dedicated their time and insights to the profiles presented in the first 10 Internal Auditing Around the World installments. We look forward to sustaining this endeavor by keeping close tabs on how internal audit leaders will continue to improve, expand, evolve and grow even more essential to their organizations during the next decade. Brian Christensen Robert B. Hirth Jr.* Protiviti Executive Vice President Former Protiviti Executive Vice President Global Internal Audit Global Internal Audit (2002-2011) *Currently serving as COSO Chairman TENTH ANNIVERsaRY EDITION • Internal audItIng around the World • iii Acknowledgements Our sincere thanks to the leading companies that have participated in our Internal Auditing Around the World series over the past 10 years. Volume 1 Volume 3 Volume 5 Volume 9 Barclays ABN AMRO Bank Mandiri BHP Billiton BP Australia Post Barrick CIBC Edison Bunge Limited Continental Airlines Dassault Systèmes Fiat Group CA, Inc. Enel General Mills France Telecom Foster’s Group FEMSA KPN General Motors Grupo Bimbo Gemalto Legg Mason Inc. Corporation Lloyds TSB Microsoft Sony Group Harley-Davidson MGM MIRAGE Prudential plc Visa Inc. Komatsu America NASD Tata Motors Volume 10 Corp. Royal Bank of Canada Unilever ABN AMRO Manulife Financial Royal Bank of Scotland UnitedHealth Group Corporation Group Atlas Air Worldwide Volume 6 Poste Italiane Royal Philips Baidu The Qantas Group Shinsei Bank, Limited Accenture Barclays PLC Royal Mail Sigma-Aldrich Co. Commonwealth Bank Booz Allen Hamilton Holdings plc of Australia Washington Mutual, Bupa Starbucks Inc. Dentsply Estée Lauder Deutsche Bank Volume 2 Wells Fargo & FIS Philips HSBC Holdings Amcor Limited Company SAP Group plc Australia and New Volume 4 Shell National University Zealand Banking Airservices Australia of Singapore Group Limited SPB Alitalia NTT DATA The Automobile Talecris Biotherapeutics Antalis Corporation Association Limited Cadence Design Volume 7 Old Mutual plc ConAgra Foods, Inc. Systems Alibaba.com Old National Bank DaimlerChrysler Cirque du Soleil DBS Pan American Silver eircom Electronic Arts Hyatt Corp. Japan Tobacco Inc. Endurance Group Hydro One Trustmark Companies National Bank of Harvard University Luxottica Group Under Armour Canada Henkel Salesforce.com Raytheon Company McDermott Sequana T-Mobile USA, Inc. Océ Sprint Nextel Telecom Italia Group Olympic Delivery Under Armour Telstra Corporation Authority Visa Inc. Limited Ontario Teachers’ Time Warner Inc. Volume 8 Pension Plan Wolseley plc Peñoles Aditya Birla Group Reader’s Digest Allstate Insurance Co. Reed Elsevier Bristol-Myers Squibb Robeco Brookfield Brazil Sadia GDF SUEZ Singapore Press Mediq Holdings TD Bank Group Vanguard iv • TENTH ANNIVERsaRY EDITION • Internal audItIng around the World Table of Contents Notable Internal Audit Milestones ................................................................................................................ i Foreword ....................................................................................................................................................... iii Acknowledgements ........................................................................................................................................iv Introduction ................................................................................................................................................. vii ABN AMRO .................................................................................................................................................. 1 Atlas Air Worldwide ...................................................................................................................................... 5 Baidu ............................................................................................................................................................... 8 Barclays PLC ................................................................................................................................................ 11 Booz Allen Hamilton ................................................................................................................................... 14 Bupa