The Internal Auditor’s role in Governance, Risk & Compliance

There is a brave and innovative internal auditor with vision willing to take a leadership role in defining his profession’s role in risk management, governance and compliance.

Michael Brozzetti of Boundless, LLC in Pennsylvania has formed the Business Integrity Alliance (BIA), a joint venture with In a half-day workshop at the Central Penn IIA Chapter, Michael presented his vision of a market-driven corporate governance initiative and asked participants to challenge his vision.

Michael’s vision lays out a framework for the internal audit profession to play a major role in the identification, analysis, determination, containment and disclosure of soft and concrete risks. 

According to Harvey L. Pitt, the 26th chairman of the U.S. Securities and Exchange Commission, “The golden rule is risk management. Unidentified, unquantified and unmitigated risk of all kinds is the enemy. The age-old approach, ‘Let’s only tell everyone what we’re required to tell them” no longer works, if it ever did.”

Incorporating the Key Agreed Principles to Strengthen Corporate Governance for U.S. publicly traded companies of the National Association of Corporate Directors (NACD), this market driven approach does not rely on government regulations and oversight to address the ever evolving corporate governance problem.

A key component of Billionaire Warren Buffett’s investment strategy is to invest in companies run by honest and competent people. Unfortunately, “… it’s hard to write rules to prevent excesses.  It’s in human nature to go to excess.”

BIA’s market driven approach makes use of zEthics’ online tools to see across all departments, regions and silos of the enterprise to address the needs of top management in risk oversight, corporate strategy, transparency, and executive compensation.

The role of the internal auditor is to influence positive and sustainable change to the governance and risk management principles and practices, which are so vital to organizations, their stakeholders, and the communities in which they operate. Corporate governance standards must balance two goals — protecting the interests of shareowners while respecting the duty of boards and managers to direct and manage the affairs of the corporation.

According to Charles M. Elson, the Edgar S. Woolard Jr. chair in corporate governance at the University of Delaware, “Independent, equity-holding boards, accountable first and foremost to investors in free election, are the ultimate solution to the compensation controversy and the key to effective investor protection.”

BIA is asking investors (pension funds, mutual funds, and private equity funds) to play a role in the interaction, the data review, and the insight development by collaborating on a pilot program, which will clearly define the internal auditors role in risk management, governance and compliance.


About zethics
CEO and founder of zEthics, Inc. Thirty years of experience with finance and accounting background in public private sectors.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: