Heads of Internal Audit Virtual Forum

Chair's opening comments

The Institute recently published the report Organisations Preparedness for Climate Change. Some of you may also have heard me reflect on the key messages of that report in our climate change live stream on Facebook.

On a personal level, I feel the need to enhance my focus and contribution to creating a better environment. I want to encourage you, my internal audit peers, to also up your game and support your organisations to respond positively to the reality of climate change.

I would like you to think about three recent quotes from an audit committee chair, head of internal audit and head of sustainability.

“Internal Audit simply has to be forward looking now…critical thinkers and most importantly, critical influencers”

“Five years ago, we viewed climate change as a risk and responded accordingly by starting to define risk mitigation or risk avoidance responses. Now we understand it properly and recognise that this is actually an opportunity to contribute to a better future. An opportunity we simply have to grab now”

“My internal audit function has a significant challenge to become more knowledgeable on several topics, particularly climate and sustainability. They must invest in learning because we need them. If they don’t then we will certainly be impacted by their silence.”

Our guest speaker today will talk about how his organisation is responding to the challenge. Air travel will resonate with many of us and I encourage you to focus on this personal connection as it may help you to think differently when considering the implications for your own organisations, not just in relation to business travel but the broader services and ways of working that impact our carbon footprint.

Institute's comments

This is a subject that we need all need to engage with. As CEO of the Chartered IIA, I need to ask what we are doing and question if we measure enough of what we do and like many of you I don’t think we do. We all, each and every one of us, need to look at first principles.

Our resources page includes a quick reference guide to a suite of climate-related guidance we have published this year, including auditing carbon usage, understanding climate financial risk and auditing climate data.

View from Richard Chambers, President/CEO OF IIA Global

Having travelled extensively as part of my global role, this year has given me an opportunity to be at home more. I don’t know that I would’ve made the decision to step down from my role if I hadn’t had this experience. I think there’s going to be a lot more people reflecting on it and 2021 being different.

Here in the US, it’s clear that there doesn’t seem to be a global consensus on what climate change means. There is always the possibility that the biggest contributors, companies and countries, will be the last to want to transform. It’s hard to drive change without incentive to change or penalties for not changing.

This subject is a real opportunity for internal audit. It’s easy to look at compliance with targets and the risk of penalties, it’s more of an imperative to influence behavioural change.

Chair's closing comments

The most impactful of the earlier quotes is the potential for audit to be silent. This cannot be allowed to happen as it would be a failure to meet our responsibility to provide assurance over the management of risk.

Our role in climate assurance is about insight, foresight, and making a difference.

Too many of the responses in the climate report I referred to earlier used the ‘unsure’ option; unsure about government guidance, unsure about what their organisation needed to do and unsure about their organisation’s response.

Heads of internal audit need to have certainty. You need to be certain about the engagement and response of your organisation. Unsure is not acceptable for us as a profession.

Climate change is now as much about the upside of risk as it is the downside – how many of your organisations are treating this as an opportunity?

We have focused on air travel today. Consider how you audit travel in general and how these new insights might inform your approach to all other climate and sustainability work.

I challenge you to look at your audit plan and ask if coverage of climate change is appropriate.

We have talked about measurement being a useful start point, understanding what is relevant, ensuring data accuracy, setting appropriate targets and assessing achievement.

I ask you to read our report and close with you a quote which stood out for me by Stephen Licence, Group Chief Internal Auditor, Legal & General Group.

“The opportunities as an internal audit function are to give insights and assurance on the most significant and high-profile risk facing society as well as the organisation. This means they need to have the right skills, so there is an opportunity for the team to expand their knowledge and grow in a new and important topic that is going to be here for a long time. It is about continuing to be relevant and to have an impact.”

Click here for our events page where you will find virtual sessions on a range of topics, including remote working, audit planning and risk management.

After the next forum, we will move to a monthly schedule for 2021.

We will propose the initial topics for you to vote on at our next meeting. 

During our earlier forums, many of you shared your experiences of 2020, including some great solutions to the challenges that the pandemic has presented. We would actively encourage you to enter our 2021 Audit  & Risk Awards. There are five categories to choose from and deadlines for nominations close on Friday 29 January 2021. For more details, click here

Please contact me if you are interested in sharing your experiences on a particular topic with this forum, there is real benefit in sharing as collaboration helps us all to develop and improve.