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ECIIA Conference Special

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ECIIA Conference Special

  1. 1. T H E O F F I C I A L M A G A Z I N E O F T H E E C I I A In search of stability ECIIA CONFERENCE SPECIAL Madrid 2011 ConfrenCe speCial — Madrid 2011
  2. 2. 2 CONFERENCE SPECIALBetter grip on risk still Auditors join forces in fight for betterneeded, say business leaders controls in the public sector audit in the public sector consideringIn the current environment, it is for the long-term success of all the common objectives of promotingimportant that organisations strive to organisations and internal audit is the better control and ethics withinget a better grip on overseeing the last line of defense to ensure global the governmental entities”, saidrisks their businesses face, says David assurance on internal governance to Richard Chambers, Chairman IIA.Landsittel, chair of COSO, the corporate the corporate boards”, commented “Supreme Audit Institutions ofgovernance thought leadership body. Richard Chambers, President and CEO the euro zone countries are following “Both management and board of the Institute of Internal Auditors, closely the model of supervisionmembers are not satisfied with board speaking at the ECIIA conference. and control of the European Stabilityoversight of risk management and, as Chambers said that a more stable Mechanism which has alreadya result, pressure is mounting from model of corporate governance entered into force” said Mr. Núñezregulators and others to continue to was beginning to emerge. Pérez, “The prolonged crisis hasenhance board oversight processes”, “We are starting to see boards Presidents of the members of the fiscal stability and the containment highlighted the social values ofLandsittel said, speaking at the ECIIA hold the chief executive officer European Confederation of Institutes of debt”, commented the any business organisation as wellannual conference in Madrid. and management to account more of Internal Auditing met at their Secretary General of EUROSAI, as the achievement of profitability “Board directors are sometimes strongly. Internal audit is playing General Assembly on the 22nd of Manuel Núñez Pérez. and concern for keeping long-termover-confident about the way they view a role in supporting the board in October in Madrid. The General Mr. Núñez’s participation solvency. It has social responsibilityrisk management and internal control, that move”, Chambers said. Secretary of EUROSAI, the European in the opening of this meeting goals to be addressed and internalresulting in overlooking risks that could Landsittel’s and Chambers’ Organisation of Supreme Audit reinforces the cooperation set auditor involvement is very relevant.”have a significant impact,” he said. views echo the European Institutions, addressed an opening by the agreement signed in “Perhaps the continuing crisis Landsittel noted that COSO Commission’s recent efforts to speech to the assembly, where March of this year between the forces us to revise many approacheshas published and will continue to improve the long-term viability of he remarked the value of joining two organisations, as well as in the organisation of the publicissue “thought papers” with a goal listed companies by encouraging forces to help to improve controls the global agreement previously and private sectors and to forgetof helping organisations move their better corporate governance. In its over government expenditure reached between the world wide attitudes more interested in short-risk management processes up the most recent consultation document, and performance processes. organisations, INTOSAI and the IIA. term and immediate success than“maturity curve” and will release an The EU Corporate Governance “It is clear that the crisis has “Our Global agreement with in the suitability of the organisationexposure draft of a proposed update Framework, the EC focused on opened new areas of action for INTOSAI recognises the worldwide and business network, and into its internal control framework soon. how corporations should manage public scrutiny, especially as it value of professional collaboration safeguarding the welfare state” “Good risk management and and report on risk following recent concerns public expenditure and between external audit and internal states Núñez Pérez.internal control are the necessary financial and economic crises.ECIIA Conference Special
  3. 3. 3 CONFERENCE SPECIALIn searchof stabilityCorporate governance should be at the heartof the new world order in Europe, but businessleaders warm against enforcing extra legislationInternal audit is playing anincreasingly important role in the IIA Richard Chambers, speaking at the recent annual conference of the European Confederation The model of corporate governance favoured by the ECIIA and put forward to the EC during the body’s recent prepared. “Internal audit is the last and ultimate line of defence the board wants to identify internal control more interdependent,” he said. “Internal audit has a role to play in the current crisis because its corenew corporate governance “world of Internal Auditors in Madrid. consultation on its Green Paper is the issues – beyond that lays the abyss of values of objectivity and independenceorder” that is beginning to emerge in “We are starting to see boards “three lines of defence model.” This regulators,” he told the conference. are more important than ever.”Europe. While the European Union hold the chief executive officer and sees an organisation’s internal control If regulators found something wrong, He said that value, or “valor,” hadis still consulting on its initiatives to management to account more strongly,” and operational management picking the consequences are likely to be two meanings in Spanish, both of whichachieve more stability in businesses he said. “Internal audit is playing a role up risks and control issues in the more severe than if it had been were important. First, he said, internallisted on the zone’s stock exchanges, in supporting the board in that move.” first line of defence; followed by risk identified in-house and sorted. audit terms created value by providingthe direction of reform is becoming In its most recent consultation management, compliance and essential consistent insight into the organisation’sclear: better corporate governance. document, The European Corporate monitoring functions in the second; Rising to the challenge activities and giving it the confidence “We have a corporate governance Governance Framework, the with internal audit acting as global José Manuel Muries, chairman IIA that risk was being managed properly.model starting to emerge that European Commission focused on assurance in the third line of protection. Spain and conference organiser Second, it pointed to a state of mind,makes a lot more sense in terms how corporations should manage Chambers said that this model sat said, that internal audit was well one that, for example, was preparedof stability,” said president and and report on risk following recent nicely with the new world order and placed to rise to the challenge. to go against the flow and to make anchief executive officer of Global financial and economic crises. that internal audit is professionally “Globalisation is making countries objective analysis and judgment of a »ECIIA Conference Special
  4. 4. 4 CONFERENCE SPECIAL» situation that could run counter to Richard Chambers where companies had flexibility to David Landsittel addition, external audit firms may bethe view of management, if necessary. decide on best practice within the required to report on an organisation’s Cristina Martínez, board member corporate governance framework, risk report, but, again, there is no clearof FERMA, the Federation of European to enforcement “as a matter of definition of what a risk report is inRisk Management Associations, compliance on a tick-box mentality.” practice and what it should contain.also said that internal audit should “The answer to the financial Dittmeier said that the ECIIA’scontribute to the corporate governance crisis is not more regulation of response to the green paper tended toof a company and that risk listed companies,” said Carmine move towards more stringent complymanagement should be seen as a real Di Noia, board member of the of explain rules and review overtool for decision-making processes. European Issuers. “The problem mandatory requirements, and towards But in a panel discussion at the was not the regulation, but the achieving greater accountability.conference she expressed concern supervision of financial institutions. For example, she said, in Italy manythat the EC’s recommendations Why not change the regulators and companies had the role of chairmanmight lead to further burdensome nervous” when he realised that the not the regulation supervision?” to that person and the CFO was a and chief executive carried out byregulations. “FERMA welcomes only option the EC had considered in Di Noia agreed that many of the member of the audit committee, the same person. “If there is strongthe EC’s recommendations as addressing these issues was to bring EC’s suggestions were really needed, like a fox guarding the poultry. “I clarity as to the roles, powers andthey go beyond mere superficial forward European-wide legislation. He but he said that they were not needed would like now for companies to authorities exercised in reality, then itcompliance and box-ticking,” said that while most people agreed through the introduction of more be as transparent in the corporate is easier to see if there is an excessivesaid Martínez. “There is no that corporate governance failings in regulation. He said that Parmalat, governance reports as Parmalat was concentration of power,” she said.need for further regulation, but the financial sector had contributed to the failed Italian conglomerate, in its own: But few read it,” he said. Whatever the outcome of the EU’sthere is a need to strengthen the current crisis, directors believed was a case in point. He suggested deliberations, José Manuel Martínez,the existing rules in places.” that nothing had happened to that if one had read the corporate Clarity needed chairman and chief executive officer shake their confidence in the overall governance reports published by the Carolyn Dittmeier, chief audit of the Spanish insurer MAPFRE, whoNervous over regulation framework of national corporate company, one could have seen where executive, Poste Italiane and also spoke at the conference, said:Roger Barker, advisory board governance codes that operated on the problems existed. For example, president of ECIIA, warned that “The governance system should bemember at the European directors’ a comply or explain framework. the chairman and chief executive some of the reforms suggested at the service of business goals.”group ECODA, another member of If laws are passed, said Barker, officer were the same person and in the EU’s Green Paper would To that end, David Landsittel, chairthe panel, said that the EC’s Green Europe would move from a system there was a huge delegation of power require a fair amount of guidance. of COSO, the corporate governancePaper gave a “comprehensive For example, she said, the thought leadership body, said thatand balanced description” of what document suggested that there should it was important for organisations toareas needed to be addressed to “Internal audit has a role to play in the be a mandatory risk committee around strive to get a better grip on overseeingachieve good corporate governancein European companies. current crisis because its core values of the area of risk models. “Not everyone agrees on a definition of what a the risks of their businesses. The ECIIA conference took place But he said that he became “more objectivity and independence” risk model looks like,” she said. In in Madrid on 19-21 October 2011.ECIIA Conference Special
  5. 5. 5 CONFERENCE SPECIALECIIA elects new management board Carolyn Dittmeier Management Address from the president Board I will work hard with my colleagues Governance Citizen Programme decisions, I believe that priority on the Management Board to developed by the ECIIA provides must also be placed on providing Marie-Hélène Laimay ensure that the ECIIA continues a means for an organisation to knowledge and guidance that will Vice President to effectively promote risk manifest their commitment to in turn lead to efficient dialogue management, internal control, such. As internal auditors, we with auditors and the board internal audit and corporate are passionately committed to or other governing bodies. Hans Joachim governance in Europe and assisting entities, both private and For all these reasons, I have Büsselberg the Mediterranean Basin. public, to achieve the highest and selected as the theme for myDuring the General Assembly that The primary objectives most efficient levels of governance. mandate: “internal governancetook place in Madrid on the 22nd Martin Stevens of my mandate are: In light of the financial crisis, before external regulation”.of October, Carolyn Dittmeier was Treasurer • to ensure ECIIA provides a the corporate governance failures The ECIIA is a key elementelected President. Ms Dittmeier is primary reference point for experienced and the consequential in the development of goodChief Audit Executive of Poste Italiane information and guidance on trend towards increased European-wide Corporateand past president of the institute of Thijs Smit sound governance principles regulation, I believe that our top Governance and with ourinternal auditors of Italy. A graduate • to support the development priority is to emphasise to all National Institutes locatedof Wharton School of the University of norms and guidance, as enterprises the importance of solid in all 36 countries of theof Pennsylvania, CIA and CPA. In appropriate, in the areas and efficient internal governance. European Union and in a large Kristina Bernotaiteaddition the following professionals, of corporate governance In addition, the time has come number of the surroundinghigh level representatives of the and the audit profession to emphasise assurance beyond neighbourhood countries,institutes of France, Germany, • to raise awareness of the value the financial reporting area. As internal auditors represent aSpain, Norway, the Netherlands, Philip Ratcliffe of internal audit through the internal auditors play an important driving force for change.the UK and Lithouania were elected Three Lines of Defense Model. role in assessing the information(see Management Board). All organisations have an interest and communication processes Also during the General Juan Ignacio in good Corporate Governance that form the basis for strategic Carolyn Dittmeier Assembly Pascale Ruiz Zorrilla and, as part of this, the Corporate and operational management ECIIA President Vandenbussche wasappointed the new Secretary General.ECIIA Conference Special - November 2011

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