Trust, creativity and audit: insights from Washington DC
A recent global conference underscored the pivotal role internal audit plays in supporting effective governance.
One of my global board roles on behalf of the Institute of Directors in New Zealand and the Global Network of Director Institutes (GNDI) is serving on the International Internal Audit Standards Board’s International Professional Practices Framework Oversight Council.
The Council is critical in ensuring that internal audit standards remain rigorous and relevant and features representatives of the OECD, and World Bank among others. Our annual in-person Council meeting was held in Washington DC in conjunction with the Institute of Internal Audit’s three-day Global Conference, where the discussion ranged from AI and quantum computing to fraud and diversity, equity and inclusion. Here are 10 key insights from the conference sessions.
1. Trust and collaboration: Lessons from space
Astronaut Mike Massimino’s keynote was a highlight, emphasising the importance of rigorous preparation, trust in your tools and team, and the necessity of giving opportunities to new team members. These lessons are directly applicable to board governance, where preparation and collaboration are critical to success.
2. Auditing DEI initiatives
Kevin Ekendahl and Victoria Coady explored the challenges and nuances of auditing diversity, equity and inclusion initiatives globally. They highlighted the importance of understanding regional differences to effectively assess DEI strategies. For New Zealand directors, this underscores the need to tailor DEI audits to reflect our unique cultural and societal landscape.
3. Combating greenwashing
Internal auditors have an increasingly important role in identifying and addressing greenwashing. This is particularly relevant as companies publicly commit to sustainability and report on the climate impacts and actions.
4. Fraud risk management
Jan Droogsma’s session on fraud risk assessments research revealed the surprisingly low impact of audit and risk committees on the quality of fraud controls. This highlights an area for improvement in governance practices globally, where strengthening the role and effectiveness of these committees can significantly enhance fraud risk management.
5. Quantum computing and cyber security
Nick Reese’s session on quantum computing stressed the impending impact of this technology on business operations, particularly in areas like encryption and cyber security. Boards need to prioritise ongoing education and to be proactive to prepare for these changes. It’s not just AI that needs to be on your agenda.
6. Ethics and whistleblowing
Xavier Justo’s whistleblower story underscored the immense personal cost of exposing financial crimes and the critical role of ethics in organisations. He blew the whistle in what is known as the 1MBD scandal and ended up imprisoned during an attempted cover-up. This session reinforced the need for robust ethics and whistleblowing processes to ensure transparency and accountability, essential for maintaining public trust in our institutions.
7. Governance and AI
The session on governance of generative AI, led by John Paek and David Grünbaum from Salesforce, highlighted the risks associated with AI and the importance of robust governance frameworks. As AI continues to evolve, it is imperative that boards understand and manage these risks effectively.
8. Integrated risk and assurance
Jim Pelletier’s session stressed the need for a holistic view of risk and assurance. This approach can help boards make informed decisions about risks and enhance overall organisational assurance, thus reducing inefficiencies and organisational fatigue.
9. AI in cyber defence
Jibran Ilyas, from Google Cloud (Mandiant), discussed the role of AI in improving cyber security defences. The rise of AI-driven cyber threats necessitates a proactive approach to cyber security, integrating advanced AI technologies to stay ahead of increasingly sophisticated threats.
10. SuperCreativity and the future of work
James Taylor’s session on ‘SuperCreativity’ emphasised the importance of collaboration, creativity, critical thinking and communication in the age of AI. The ability to augment our creative processes with technology may dramatically change the way we work in the future.
Kirsten Patterson and Guy Beatson (from the IoD’s Governance Leadership Centre) will be speaking at Governing the Internal Audit Function - Implications for Boards from new Global Internal Audit Standards on 27 August.