Chairman’s Message

As I write this, the Dow Jones Industrial Average is at a nine-year low and the collective retirement savings of Americans has shrunk by about US $2 trillion — yes, trillion. My own IRA is about 35 percent lower than its all-time high, which was not that long ago. Like many people, I’m beginning to wonder when I’ll actually be able to retire. What a time to be in the financial services industry! Some of us old-timers can remember the early 1980s with 17 percent interest rates, the crash of October 1987, and the Savings and Loan scandal of the late 1980s and early 1990s, but those events were nothing compared to what’s happening now.


My thoughts are with fellow internal auditors at Washington Mutual, Bear Stearns, Lehman Brothers, Merrill Lynch, Wachovia, and AIG, among others. Luckily for internal auditors, the U.S. Sarbanes-Oxley Act of 2002 and other regulatory requirements have made it somewhat more difficult to cut into our ranks to reduce staff. However, internal auditors in many organizations are no doubt facing some tough times ahead. It’s a good time for all of us to step back and assess our overall performance before someone else does it for us. Whenever the pressure is on — as it is now — in most organizations, management might look for others to blame and places to cut. Sometimes internal auditing gets caught in the crosshairs whether deserving or not. I know from personal experience.


My advice to those in internal audit management positions is to know what’s happening in your organization by building a trusted network of associates in other business lines. Reach out to compliance, risk management, and other risk functions if you haven’t already. Be aware of the warning signs from management that may be an indicator that they are dissatisfied with the way things are going and are looking for scapegoats for negative events happening in the organization (e.g., poor earnings reports, a bad regulators report, unexpected losses, and operational problems). How many times have we heard “Where were the auditors?” Be proactive in discussing internal auditing’s role in any of these events. Make sure you continue to demonstrate your value to your organization and tell others about your successes, as well as looking at areas where you can continue to improve. My point is that in difficult times, internal auditors need to be even more alert and vigilant than usual to head off problems and issues before they arise.


These are extraordinary times, and we should all be prepared for what may happen in our organizations. Perhaps by the time The IIA’s annual Financial Services Conference takes place next June, things will be looking up. Your Financial Services Advisory Board members are working diligently to design a great program for the conference, and there certainly will be a lot more to talk about by then. So please make plans now to be in Orlando, Fla., next June for the conference.


As always, please feel free to contact me or any of the Financial Services Advisory Board members with questions or concerns.


Warm regards,
Scott White, CIA, CFSA
Financial Services Advisory Board Chairman