1. T H E O F F I C I A L M A G A Z I N E O F T H E E C I I A
In search
of stability
ECIIA CONFERENCE SPECIAL
Madrid 2011
ConfrenCe speCial — Madrid 2011

2. 2 CONFERENCE SPECIAL
Better grip on risk still Auditors join forces in fight for better
needed, say business leaders controls in the public sector
audit in the public sector considering
In the current environment, it is for the long-term success of all the common objectives of promoting
important that organisations strive to organisations and internal audit is the better control and ethics within
get a better grip on overseeing the last line of defense to ensure global the governmental entities”, said
risks their businesses face, says David assurance on internal governance to Richard Chambers, Chairman IIA.
Landsittel, chair of COSO, the corporate the corporate boards”, commented “Supreme Audit Institutions of
governance thought leadership body. Richard Chambers, President and CEO the euro zone countries are following
“Both management and board of the Institute of Internal Auditors, closely the model of supervision
members are not satisfied with board speaking at the ECIIA conference. and control of the European Stability
oversight of risk management and, as Chambers said that a more stable Mechanism which has already
a result, pressure is mounting from model of corporate governance entered into force” said Mr. Núñez
regulators and others to continue to was beginning to emerge. Pérez, “The prolonged crisis has
enhance board oversight processes”, “We are starting to see boards Presidents of the members of the fiscal stability and the containment highlighted the social values of
Landsittel said, speaking at the ECIIA hold the chief executive officer European Confederation of Institutes of debt”, commented the any business organisation as well
annual conference in Madrid. and management to account more of Internal Auditing met at their Secretary General of EUROSAI, as the achievement of profitability
“Board directors are sometimes strongly. Internal audit is playing General Assembly on the 22nd of Manuel Núñez Pérez. and concern for keeping long-term
over-confident about the way they view a role in supporting the board in October in Madrid. The General Mr. Núñez’s participation solvency. It has social responsibility
risk management and internal control, that move”, Chambers said. Secretary of EUROSAI, the European in the opening of this meeting goals to be addressed and internal
resulting in overlooking risks that could Landsittel’s and Chambers’ Organisation of Supreme Audit reinforces the cooperation set auditor involvement is very relevant.”
have a significant impact,” he said. views echo the European Institutions, addressed an opening by the agreement signed in “Perhaps the continuing crisis
Landsittel noted that COSO Commission’s recent efforts to speech to the assembly, where March of this year between the forces us to revise many approaches
has published and will continue to improve the long-term viability of he remarked the value of joining two organisations, as well as in the organisation of the public
issue “thought papers” with a goal listed companies by encouraging forces to help to improve controls the global agreement previously and private sectors and to forget
of helping organisations move their better corporate governance. In its over government expenditure reached between the world wide attitudes more interested in short-
risk management processes up the most recent consultation document, and performance processes. organisations, INTOSAI and the IIA. term and immediate success than
“maturity curve” and will release an The EU Corporate Governance “It is clear that the crisis has “Our Global agreement with in the suitability of the organisation
exposure draft of a proposed update Framework, the EC focused on opened new areas of action for INTOSAI recognises the worldwide and business network, and in
to its internal control framework soon. how corporations should manage public scrutiny, especially as it value of professional collaboration safeguarding the welfare state”
“Good risk management and and report on risk following recent concerns public expenditure and between external audit and internal states Núñez Pérez.
internal control are the necessary financial and economic crises.
ECIIA Conference Special

3. 3 CONFERENCE SPECIAL
In search
of stability
Corporate governance should be at the heart
of the new world order in Europe, but business
leaders warm against enforcing extra legislation
Internal audit is
playing an
increasingly important role in the
IIA Richard Chambers, speaking
at the recent annual conference
of the European Confederation
The model of corporate governance
favoured by the ECIIA and put forward
to the EC during the body’s recent
prepared. “Internal audit is the last
and ultimate line of defence the board
wants to identify internal control
more interdependent,” he said.
“Internal audit has a role to play in
the current crisis because its core
new corporate governance “world of Internal Auditors in Madrid. consultation on its Green Paper is the issues – beyond that lays the abyss of values of objectivity and independence
order” that is beginning to emerge in “We are starting to see boards “three lines of defence model.” This regulators,” he told the conference. are more important than ever.”
Europe. While the European Union hold the chief executive officer and sees an organisation’s internal control If regulators found something wrong, He said that value, or “valor,” had
is still consulting on its initiatives to management to account more strongly,” and operational management picking the consequences are likely to be two meanings in Spanish, both of which
achieve more stability in businesses he said. “Internal audit is playing a role up risks and control issues in the more severe than if it had been were important. First, he said, internal
listed on the zone’s stock exchanges, in supporting the board in that move.” first line of defence; followed by risk identified in-house and sorted. audit terms created value by providing
the direction of reform is becoming In its most recent consultation management, compliance and essential consistent insight into the organisation’s
clear: better corporate governance. document, The European Corporate monitoring functions in the second; Rising to the challenge activities and giving it the confidence
“We have a corporate governance Governance Framework, the with internal audit acting as global José Manuel Muries, chairman IIA that risk was being managed properly.
model starting to emerge that European Commission focused on assurance in the third line of protection. Spain and conference organiser Second, it pointed to a state of mind,
makes a lot more sense in terms how corporations should manage Chambers said that this model sat said, that internal audit was well one that, for example, was prepared
of stability,” said president and and report on risk following recent nicely with the new world order and placed to rise to the challenge. to go against the flow and to make an
chief executive officer of Global financial and economic crises. that internal audit is professionally “Globalisation is making countries objective analysis and judgment of a »
ECIIA Conference Special

4. 4 CONFERENCE SPECIAL
» situation that could run counter to Richard Chambers where companies had flexibility to David Landsittel addition, external audit firms may be
the view of management, if necessary. decide on best practice within the required to report on an organisation’s
Cristina Martínez, board member corporate governance framework, risk report, but, again, there is no clear
of FERMA, the Federation of European to enforcement “as a matter of definition of what a risk report is in
Risk Management Associations, compliance on a tick-box mentality.” practice and what it should contain.
also said that internal audit should “The answer to the financial Dittmeier said that the ECIIA’s
contribute to the corporate governance crisis is not more regulation of response to the green paper tended to
of a company and that risk listed companies,” said Carmine move towards more stringent comply
management should be seen as a real Di Noia, board member of the of explain rules and review over
tool for decision-making processes. European Issuers. “The problem mandatory requirements, and towards
But in a panel discussion at the was not the regulation, but the achieving greater accountability.
conference she expressed concern supervision of financial institutions. For example, she said, in Italy many
that the EC’s recommendations Why not change the regulators and companies had the role of chairman
might lead to further burdensome nervous” when he realised that the not the regulation supervision?” to that person and the CFO was a and chief executive carried out by
regulations. “FERMA welcomes only option the EC had considered in Di Noia agreed that many of the member of the audit committee, the same person. “If there is strong
the EC’s recommendations as addressing these issues was to bring EC’s suggestions were really needed, like a fox guarding the poultry. “I clarity as to the roles, powers and
they go beyond mere superficial forward European-wide legislation. He but he said that they were not needed would like now for companies to authorities exercised in reality, then it
compliance and box-ticking,” said that while most people agreed through the introduction of more be as transparent in the corporate is easier to see if there is an excessive
said Martínez. “There is no that corporate governance failings in regulation. He said that Parmalat, governance reports as Parmalat was concentration of power,” she said.
need for further regulation, but the financial sector had contributed to the failed Italian conglomerate, in its own: But few read it,” he said. Whatever the outcome of the EU’s
there is a need to strengthen the current crisis, directors believed was a case in point. He suggested deliberations, José Manuel Martínez,
the existing rules in places.” that nothing had happened to that if one had read the corporate Clarity needed chairman and chief executive officer
shake their confidence in the overall governance reports published by the Carolyn Dittmeier, chief audit of the Spanish insurer MAPFRE, who
Nervous over regulation framework of national corporate company, one could have seen where executive, Poste Italiane and also spoke at the conference, said:
Roger Barker, advisory board governance codes that operated on the problems existed. For example, president of ECIIA, warned that “The governance system should be
member at the European directors’ a comply or explain framework. the chairman and chief executive some of the reforms suggested at the service of business goals.”
group ECODA, another member of If laws are passed, said Barker, officer were the same person and in the EU’s Green Paper would To that end, David Landsittel, chair
the panel, said that the EC’s Green Europe would move from a system there was a huge delegation of power require a fair amount of guidance. of COSO, the corporate governance
Paper gave a “comprehensive For example, she said, the thought leadership body, said that
and balanced description” of what document suggested that there should it was important for organisations to
areas needed to be addressed to “Internal audit has a role to play in the be a mandatory risk committee around strive to get a better grip on overseeing
achieve good corporate governance
in European companies.
current crisis because its core values of the area of risk models. “Not everyone
agrees on a definition of what a
the risks of their businesses.
The ECIIA conference took place
But he said that he became “more objectivity and independence” risk model looks like,” she said. In in Madrid on 19-21 October 2011.
ECIIA Conference Special

5. 5 CONFERENCE SPECIAL
ECIIA elects new management board
Carolyn Dittmeier
Management Address from the president
Board I will work hard with my colleagues Governance Citizen Programme decisions, I believe that priority
on the Management Board to developed by the ECIIA provides must also be placed on providing
Marie-Hélène Laimay ensure that the ECIIA continues a means for an organisation to knowledge and guidance that will
Vice President to effectively promote risk manifest their commitment to in turn lead to efficient dialogue
management, internal control, such. As internal auditors, we with auditors and the board
internal audit and corporate are passionately committed to or other governing bodies.
Hans Joachim
governance in Europe and assisting entities, both private and For all these reasons, I have
Büsselberg
the Mediterranean Basin. public, to achieve the highest and selected as the theme for my
During the General Assembly that The primary objectives most efficient levels of governance. mandate: “internal governance
took place in Madrid on the 22nd Martin Stevens of my mandate are: In light of the financial crisis, before external regulation”.
of October, Carolyn Dittmeier was Treasurer • to ensure ECIIA provides a the corporate governance failures The ECIIA is a key element
elected President. Ms Dittmeier is primary reference point for experienced and the consequential in the development of good
Chief Audit Executive of Poste Italiane information and guidance on trend towards increased European-wide Corporate
and past president of the institute of Thijs Smit sound governance principles regulation, I believe that our top Governance and with our
internal auditors of Italy. A graduate • to support the development priority is to emphasise to all National Institutes located
of Wharton School of the University of norms and guidance, as enterprises the importance of solid in all 36 countries of the
of Pennsylvania, CIA and CPA. In appropriate, in the areas and efficient internal governance. European Union and in a large
Kristina Bernotaite
addition the following professionals, of corporate governance In addition, the time has come number of the surrounding
high level representatives of the and the audit profession to emphasise assurance beyond neighbourhood countries,
institutes of France, Germany, • to raise awareness of the value the financial reporting area. As internal auditors represent a
Spain, Norway, the Netherlands, Philip Ratcliffe of internal audit through the internal auditors play an important driving force for change.
the UK and Lithouania were elected Three Lines of Defense Model. role in assessing the information
(see Management Board). All organisations have an interest and communication processes
Also during the General Juan Ignacio in good Corporate Governance that form the basis for strategic Carolyn Dittmeier
Assembly Pascale Ruiz Zorrilla and, as part of this, the Corporate and operational management ECIIA President
Vandenbussche was
appointed the new Secretary General.
ECIIA Conference Special - November 2011