Internal auditors are seeing their audit reports get “diluted or suppressed” by senior executives or even having their careers derailed when they raise red flags within large corporations, according to an Australia internal auditor.
The allegations, by Peter Jones, head of the Institute of Internal Auditors’ Australia chapter, comes in response to criticism by Elizabeth Johnstone, chairman of the ASX Corporate Governance Council in Australia, that internal auditors had lost their authority within large corporations, were too timid to “speak truth to power,” and too readily intimidated into watering down their own audit reports.
Her criticism and Jone’s allegations come in the wake of an investigation by Australian regulators into multiple failures at Commonwealth Bank of Australia and other banks. Regulators found that problems and weaknesses were routinely identified by internal audit, but often went ignored. On some occasions, according to the investigation, audit findings may have been diluted or changed.
Jones was unable to provide specific details of his allegations, but said the institute was aware of other cases where internal auditors had been ignored or punished for doing their job, which is to ensure that systems and processes within a company operate as expected.