In the post-Enron era where risks to corporate reputation are readily acknowledged as something to be taken seriously, organizations are investing significant resources in communicating to current and potential stakeholders their commitment to integrity and ethical practices. Now internal auditors are taking a look at corporate social responsibility (CSR), also known as sustainable development, as an area in which their expertise on risk, control, and governance can boost the public’s confidence and trust in their organization. In a survey conducted this month of more than 3,000 internal auditors, 92 percent said internal auditing can add value to an organization’s CSR planning and reporting, and approximately half even felt that CSR is a topic important enough to be discussed between an organization’s chief audit executive and the audit committee.
“Internal auditors do not only focus on financial matters. They help management and the board of directors meet the goals and objectives of an organization. They work with management to identify risks that pose the greatest threat to stability, profitability, and overall well-being, and to ensure that the internal controls in place are effective to mitigate those risks,” says Jim Key, CIA, a consultant in the internal audit field, and instructor of a new CSR seminar offered by The Institute of Internal Auditors (IIA). “It’s only natural that internal auditors would examine whether their organization is honoring its ethical responsibilities and respecting people, communities, and the natural environment – values on which a reputation is built.”
Another recent study** commissioned jointly by two leading global organizations dedicated to promoting environmental and social responsibility, points to the trend of businesses connecting CSR to overall business strategy. The survey of 54 sustainable business professionals from companies in a broad range of industries stated that more than half (68 percent) of the respondents agreed that their company’s social responsibility efforts were tied to business success, and almost all (94 percent) thought CSR will have a greater impact on business strategy over the next five years.
That’s why training and education on CSR issues is so important, says Key. “Companies in Europe are leading in CSR trends. But in the global economy, social responsibility is more frequently influencing investment decisions around the world,” he explains. “Because of internal auditors’ intimate knowledge of their organization’s risks and corporate culture, they bring a unique perspective to sustainable development and CSR discussions at the management table.”
“In a time when the importance of strong internal control is top-of-mind for all organizations, we’re actually seeing some instances in which internal auditors are being tapped to verify CSR-related information and controls that are beyond compliance with environmental laws,” he added. “We’re even validating policies and procedures such as an organization’s adherence to acknowledged corporate principles and an ethical tone at the top.”
The IIA’s new seminar, “Corporate Social Responsibility: Opportunities for Internal Auditing,” the first-ever training of its kind for internal auditors, addresses emerging practices in social responsibility and sustainable development, and examines CSR links to governance and risk management. The seminar is designed to also help internal auditors better understand their role and value in CSR, and how they can best communicate that to management.
“As the voice of the profession, The IIA advocates internal auditing’s role in enterprise risk management (ERM) and sustainable development,” says Stacy Mantzaris, CIA, vice president of educational programs for The IIA. “Organizations are more commonly using CSR and sustainable development reporting as a way to gain a competitive advantage and assure stakeholders of their viability. This seminar will help internal auditors understand how they can support that strategy.”
The IIA’s first offerings of “Corporate Social Responsibility: Opportunities for Internal Auditing” will take place in New Orleans, February 19-21, and in Boston, July 30 – August 1, 2007. To register, contact The IIA at +1-407-931-1111, or click here.
More information about this issue is available in the newly released book Sustainability and Internal Auditing, by Hans Nieuwlands, CIA, CCSA, CGAP, RA, available through The IIA’s bookstore.