LONDON (Reuters) – Businesses in Britain are being urged to adopt a new code for internal auditors to boost corporate governance and restore trust after a string of accounting scandals raised questions about accountants’ ability to detect fraud and other risks.
Under the new Internal Audit Code of Practice, auditors are being urged for the first time to explicitly review risks such as a firm’s culture, climate change, artificial intelligence, cybersecurity, fraud and economic crime, the Chartered Institute of Internal Auditors (IIA) said on Wednesday.
Non-financial firms are also being asked to consider customer treatment and capital and liquidity risks.
The new code is being rolled out after the collapse of builder Carillion, retailer BHS, energy group Bulb, Patisserie Valerie and other high-profile corporate failures, which prompted government-backed reviews that recommended root-and-branch reform of auditing and corporate governance.
Many of the collapsed firms did not have an internal audit function, a Chartered IIA spokesman said, noting that corporate boards could mitigate against business-critical risks by adopting the code.
There are no penalties for non-compliance, but internal auditors will be assessed against the code every five years, said the Chartered IIA, which represents around 10,000 internal audit professionals in organisations across the UK and Ireland.
(Reporting by Kirstin Ridley; editing by Jonathan Oatis)
