Executive Summary
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Internal auditors are increasingly being challenged to look at ways by which they might evaluate and improve the governance process.
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When properly leveraged, the internal audit function can play a critical role in promoting and supporting effective corporate governance.
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Internal auditors must understand and recognize that corporate governance is a politically charged area, managed by individuals at the top of the organization, including the board and its key committees.
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The governance audit encompasses: gaining consensus on a definition of governance, ascertaining whether an assurance and/or consulting engagement is more appropriate, scoping the project along with commensurate resource allocation decisions, and ensuring proper communication flow before, during, and after the engagement is concluded.
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Examples of assisting the nominating and governance committees, as well as auditing executive compensation and the compensation committee are discussed.
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The experience of Kaiser Permanente’s efforts to “improve their governance processes” is described.
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The importance of changing the outlook of the internal audit function, making it more proactive and influential, is highlighted.
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