The Case for Independent Internal Investigations


The United States Sentencing Guidelines (USSG) continue to make life tough for those in charge of corporate compliance and ethics. Corporate attorneys, both in-house and outside counsel, must ensure that companies are following protocols set for by the USSG. Rightfully, companies focus first on profits. But where does that leave the issues of compliance and ethics?

Although the creation and maintenance of a proper compliance program is secondary to core business pursuits, wise managers and executives know how critical it is to obtain specialized outside counsel to conduct internal investigations. Continue reading

Why Audits Are Near Worthless (Yes, Internal Audit Too)


Francine McKenna at re: The Auditors has an interesting post and set of comments about internal audit functions at public companies and the importance of internal auditors.

External auditors look at a company’s financial statements and a small amount of underlying transactions in order to issue a report that the financial statements are properly presented. (It’s really a check of math and application of accounting rules.) The financial statement audits aren’t designed to detect fraud, and so they almost never do.

In contrast, the internal audit function is engaged in ongoing audits of the financial reporting process and other numbers-related projects. The scope of internal audit work varies greatly from company to company. Continue reading