Internal auditors at many companies have been so consumed by Sarbanes-Oxley regulations that regular priorities are falling behind.
The amount of legwork that Sarbanes demands caught many finance departments and compliance project teams by surprise. Internal auditors were pulled away from their normal duties and assigned to compliance tasks. One common problem was if internal auditors contribute to the testing of internal controls, they should not be expected to evaluate their own work. Internal auditors' compliance work often encompassed documentation and remediation as well as controls testing.
Concerns about independence and objectivity may be limiting the candor of the dialogue between internal audit executives and their organization's audit committee. Marv Tseu, CEO and co-founder of IT compliance solutions provider Active Reasoning Inc. in Palo Alto , Calif. , serves on the audit committee of the board of directors for Plantronics, a publicly traded communications headset manufacturer. He says the audit committee meets more often than it did before Sarbanes-Oxley's passage, but meetings with the chief audit executive are much more confined to specific audit discussion points. Plantronics' internal auditors are taking a less consultative approach "due to a constant fear of being held accountable to specific opinions or advice," says Tseu, who points out that the same dynamic holds true with external auditors. "This puts an increased burden on the audit committee to ensure that the auditors are truly digging deeply into the financial data."
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