GPI: Auditing Culture – A Hard Look at the Soft Stuff

Anyone who was in the business world some 15 years ago remembers the debacles associated with organizations such as Enron, WorldCom, and Adelphia. (While all United States-based examples, similar debacles have played out globally.) People watched astonished, dismayed, and disgusted as the stories unfolded, revealing a world of alleged corporate misdeeds and misconduct that rocked global financial markets and saddled innocent employees and stockholders with irreparable financial damage. Financial pundits wondered how the controls designed to make this sort of malfeasance impossible could have failed so completely. Cynics nodded their heads knowingly and suggested that perhaps this would awaken naïve consumers to the ugly realities of corporate life and underscore the negative aspects of capitalism run amok.

Surely, a decade and a half removed, we can breathe a sigh of relief and feel confident that this sort of corporate malfeasance is behind us. Sadly, given current events that are ever-present through every media channel, that is not the case. There appears to be no shortage of corporate misbehavior and other manifestations of unsavory corporate culture, which begs the question of not only, “Where were the board and executive management?” but quite frankly, “Where is internal audit?” Perhaps more than ever, internal audit is faced with both a challenge and an opportunity. It is uniquely positioned to bring value to the organization by doing the hard work on the soft stuff — auditing culture.Anyone who was in the business world some 15 years ago remembers the debacles associated with organizations such as Enron, WorldCom, and Adelphia. (While all United States-based examples, similar debacles have played out globally.) People watched astonished, dismayed, and disgusted as the stories unfolded, revealing a world of alleged corporate misdeeds and misconduct that rocked global financial markets and saddled innocent employees and stockholders with irreparable financial damage. Financial pundits wondered how the controls designed to make this sort of malfeasance impossible could have failed so completely. Cynics nodded their heads knowingly and suggested that perhaps this would awaken naïve consumers to the ugly realities of corporate life and underscore the negative aspects of capitalism run amok. Surely, a decade and a half removed, we can breathe a sigh of relief and feel confident that this sort of corporate malfeasance is behind us. Sadly, given current events that are ever-present through every media channel, that is not the case.

There appears to be no shortage of corporate misbehavior and other manifestations of unsavory corporate culture, which begs the question of not only, “Where were the board and executive management?” but quite frankly, “Where is internal audit?” Perhaps more than ever, internal audit is faced with both a challenge and an opportunity. It is uniquely positioned to bring value to the organization by doing the hard work on the soft stuff — auditing culture.