Jules Muis Topic 2020 Revisited

1. Jules Muis  Topic 2020 Revisited

2. 2020, INTERNAL AUDITORS: Getting there by default...or by design? Or both? “We will witness the systemic consequences of working with empty tool kits on matters which are of global monetary significance.... .....So, what we probably need is another major crisis to force the next step up. A financial derivative crisis is for me one of the main candidates...” Jules Muis, May 14, 2004 Speech at the “ Internal Auditing in the Public Sector Conference” organized by Dutch Ministry of Finance 2

3. Internal Audit’s Professional Progress 1996-2012: The good news • growing esprit de corps, based on a robust body of knowledge and skill sets, toolkits, core competencies annex core specializations • successful CIA branding • regulatory support and recognition - outside-in • ever more internal recognition and support - inside-out • ever stronger ‘organizing principle’ & professional voice, centrally, regionally, nationally • a few public examples of kneecapped true internal auditor warriors, having • made a difference at the corporate level, for the benefit of stakeholders at large 3

4. The Internal Audit’s lagging, 1996/2012 : The bad news • made no visible difference in helping prevent the collapse of (trust in) the financial system, in run up to and during the crisis. • part of a still very diverse corporate governance setting, in theory and in practice, none of which worked effectively, all of which having introduced new risk management actors - for better and worse - in part complementary to, in part competing with the internal audit function • most internal audit services still faced with an open-ended overall product, few expressing comfort for controls as a whole, either for scope/budgetary purposes and/or for reasons of lack of adequate skill base to cover all essential areas. 4

5. 2012- 2020 MAIN OPPORTUNITIES • Creating a stronger enabling environment for itself, capitalizing on and steering external regulatory pressure (crisis driven) • Creating a stronger enabling environment for itself, by taking a stance on the quality of regulation and enforcement which governs the corporate/ institutional level, as well as on the systemic front, macro. • managing the balancing act between one’s organization’s internal, internal (Board, Audit Committee) stakeholders and the external stakeholders as well as the dynamics among the other transparency, diagnostic, prudential actors of one’s own organization. • introducing a results based annual reporting syntax, expressing an opinion on controls as a whole, or through a well explained disclaimer. • expansion of focus on (learning about) systemic risk and public interest, in particular for the too big to fail organizations • In short: MOVING FORWARD BY PULLING A VACUUM! 5

6. 2012-2020 MAIN BARRIERS TO PROGRESS • uncertainty, uncertainty, uncertainty in/of economic and regulatory environment • ongoing questionable corporate and institutional governance constructs • an ongoing totally dysfunctional, self-conflicting CFO function - the first prudential line of/in corporate defense! - in particular in the financial sector • IA budget pressures in ever more challenged economic environment • corporate prudential gatekeepers ‘groupthink’ • building new skill base to include macro and systemic risk issues • making COSO 2.0 work, (without anyone really understanding why the first version did not properly do its bit) • dealing with an ever more external regulatory environment, hence a more accountable operating environment, present company not excluded! • in case of ‘too big to fail/bail organizations, dealing with a new duty of care vis a vis the tax payer, implied or specific, operating in a hybrid public/business ambiance. 6

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