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November roundup

Welcome to the first in a new series of updates designed to keep our members and stakeholders informed about our efforts to raise the profile and influence of the Chartered IIA and the internal audit profession. The past few months have been particularly busy for the policy and public affairs team, especially with the new government in place, and we’re pleased to share some of the key highlights from our recent work.

Following the general election in July, we promptly issued introductory letters to key Ministers, highlighting our views on audit and corporate governance reform. This included a revamped version of our parliamentary briefing, Why We Need an Audit Reform Bill. We were delighted when the King’s Speech later that month confirmed the Government’s commitment to publish a draft Audit Reform and Corporate Governance Bill. The Chartered IIA was also directly quoted in the Number 10 lobby briefing, which outlined the details of all the Bills to be presented during this parliamentary session. We are scheduled to meet with senior civil servants working on the Bill soon. In July, we also issued our parliamentary briefing, An Introduction to Internal Audit, to MPs and Lords.

In September, we met with senior officials from the Department for Environment, Food and Rural Affairs to discuss a letter we sent earlier in the year to the Chief Executive of Ofwat. The letter highlighted our concerns about several water-only suppliers in the South East of England operating without internal audit functions. The Department has urged us to respond to the Independent Commission on the Water Sector Regulatory System, which was officially launched in October. As per our earlier parliamentary briefing, we will advocate for internal audit to be a mandatory regulatory requirement across the water sector.

A major highlight for the team in September was the launch of our new Internal Audit Code of Practice for the financial, private, and third sectors. This launch, which was the culmination of a year’s work spearheaded by the policy and public affairs team, attracted strong press coverage and was well-received by members and stakeholders alike. In September, we also issued our parliamentary briefing, Internal Audit – Protecting and Building Local Government’s Future, to MPs and Lords.

Following the collapse of construction giant ISG in October and concerns raised over its audit and governance structure, we conducted research into the internal audit capabilities of the top thirty construction companies. This revealed that, along with ISG, up to nine other construction firms might be operating without a proper third-line independent internal audit function. In response, we issued letters to Rt Hon Jonathan Reynolds MP, the Secretary of State for Business and Trade, and Rt Hon Liam Byrne MP, the Chair of the Business and Trade Select Committee, to highlight our concerns and call for further investigations into ISG’s collapse. Our letters attracted high-profile media coverage, including in the Sunday Times.

To support the launch of the new Internal Audit Code of Practice in October we also convened a virtual roundtable discussion attended by twenty-five representatives from EQA providers including all the main professional services firms. We held fruitful discussions on ways to support the embedding of the new Code, specifically regarding assessing against the Code as part of EQAs.

Over the past few months, Gavin Hayes, our Head of Policy and Public Affairs, attended several Financial Reporting Council Stakeholder Insights Group meetings. These meetings discussed the ongoing review and consultation on a revised Stewardship Code and included an introductory meeting with Sir Jan du Plessis, the current Chair of the Financial Reporting Council.

Key focus areas for the coming months include responding to the consultation on the proposed revised Stewardship Code, responding to the call for views as part of the Independent Commission on the Water Sector Regulatory System, engaging with Ministers, senior officials and parliamentarians on the Audit Reform and Corporate Governance Bill, and identifying new opportunities to advocate that all public interest entities should be required to have internal audit as an integral part of their governance structure.

Summary of press mentions

November

The Times | Construction giant ISG went bust with debts of £1bn