New Internal Auditing
November 13, 2003
CONVERGANT integrative and professional auditing practice, structured to complement and render acceptable external auditing, is essentially a control/risk and "best practices" consultation.
Global accounting and the necessities to regulate substantial transfers of circulatory capital, primarily liquid money that includes IT monetary 'transfers' and accumulation, signify (at least for large-scale stock/securities trading) a qualitatively new form of business.
President of the Institute of Internal Auditors (IIA), Lal Balkaran, recently and up until the present time has attempted to establish a more realistic connect between various 'chapters' of IA and its formulations.
This trend can benefit Guyana in a variety of ways, not least due to the relative underdevelopment of a stock market and 'corporate' culture that has become impervious to normative transparency methodologies. Historically, these methodologies have served IA as an institutionalized system of management and financial asset control.
Subjectively, the IIA benefits from risk management. One feature stems from the performance diagnostic. The global or worldwide organization describes the definition of the profession as constituting, "addressing internal audit practitioners' varied rules and responsibilities." The technique holds out the delivery of value-added, department improved and the 'systematic,' disciplined approach to evaluating the effectiveness of the total exercise based ultimately on the IIA's Guidance Task Force (GTA).
We have featured several articles on IA by Mr. Balkaran (a Guyanese resident in Canada). Among these are paragraphs that direct a focus on 'understanding multiculturalism.'
Actually, the dynamic for an independent, objective assurance with valid linkages to standards, certification and, of course, the expressed opinion of recommendations compiled in the form of a Report, equates a strategy. This strategy, Mr. Balkaran argues, must be part of a broader perspective that examines the role of culture, belief systems, social mores and behaviour patterns of junior and senior management as part of a synthesis coupled to income disparities and/or incentives.
It is with this diffuse area that corruption, as defined by Transparency International, the Organization of American States (OAS) and OECD Anti-Corruption Convention, must be tackled and dealt with.
But what has been the real life experience?
Internal auditing at the government corporation level in the Cameroon, for example, would have to technically surmount both the language constraint and the legacies of the loi cadre public service education of past times. The fact that both local and foreign companies employ multilingual strata of accountants, supervisors and managers in the 'modern' sector potentially expands the degree of risk impact and non-compliance.
At another level, almost all the soil producing and mineral extraction economies of West Africa are characterized by 'historicism' of militarization of the political culture. Democratic traditions and African 'customary' law superimposed by leading 'Islamist" traits of preparing and adjudicating income, revenue and other cash flow statements, have all been polluted by military dictatorships of one kind or another (Nigeria under General Abacha and Liberia of the Charles Taylor "kleptocracy"). It would be a hard sell for employers to support local IA firms and agencies unless legislation is put in place.
In these societies, the probelamtique of EnRon, Bre-X Barings PLC and Elf Aquitaine would carry specific implications for decision-making, especially at the level of legal codes and African Union parliamentary attitudes toward both external and internal auditing.
In Mexico and India as well as in Jamaica, Guyana, Barbados and Trinidad and Tobago, IA probity would have much more semblance to the introduction of new accounting codes where there exists a tradition of inquiry commissions and investigative bodies (since 1992, in Guyana) tasked with perusing a systematic external auditing process without which internal auditing loses much if not all of its relevance.
Closer to all and within the region, the experience of Venezuela's PDVs demonstrates how corporate corruption can defy and fight down almost with impunity IA "red flag" warnings and signs due to the power of the oligarchic class that imposes its political bias at each critical (AGM Financial Report) statutory schedule or forum.
Fundamentally important rationale abounds for the adoption of a viable IA input into the way business is conducted and capital accumulated. The debate will continue and range over more complicated phenomena. It is in line with that dialectic and movement that the PPP/C and its policy focus have created the basis for the genuinely independent system of internal auditing in Guyana.