IIA: Keep internal and external audit separate
AccountancyAge is reporting that the UK and Ireland IIA’s chief executive Ian Peters recently made a statement on the contentious issue of having external auditors provide internal audit services:
Internal auditors answer to management and the non-executive directors… external audit reports to shareholders. Merging these two important functions has the potential to cause serious conflicts of interest and reduce the effectiveness of internal controls and the management of risk.
The statement was made in relation to the KPMG-Rentokil deal.
I think if the two parties gave us more details about the work performed around independence it was assuage many of the fears stakeholders are having.
KPMG has said they believe the provision of both functions “is perfectly feasible to do in the spirit and letter of the law.” If that’s so, how long before more of these arrangements are made by KPMG or other firms?