Please, let’s not get carried away with this auditor love-fest.

The job of the internal auditor is to make sure that employees aren’t intentionally or unintentionally misleading the CEO and, through him or her, the board of the organization. History, however, has taught us that sometimes the CEO doesn’t want to know that things aren’t quite up to snuff and more particularly may not want the Board to have that information. The CEO probably owns stock or options and thus has a vested interest in the reported financial status of the company.

In the pre-Sarbanes Oxley world, the internal auditor usually worked for the CEO, reporting to the CEO and the Board

In the post-Sarbanes Oxley world, the internal auditor reports to the audit committee, which normally has the ability to hire or fire that person. While the audit committee members are appointed by the CEO and board, they have no vested interest in the company. This degree of separation between the CEO and internal auditor is critical in order for the internal auditor to do his or her job without fear of reprisal or censure.

It is important, though, that one understand that an internal auditor and the audit committee are both internal functions. The whole point is to let management know of systemic flaws that could ultimately harm the organization. This internal structure is designed to be a management tool.

Under the Strong Mayor form of government, Mayor Jerry Sanders is “management”.

As such, he absolutely must have an unvested audit committee and an internal auditor in place in order to satisfy himself that what he is being told is happening in the bowels of the organization truly is happening.

The independent look at management is a separate function and comes from the outside auditors (KPMG, Macias Gini, or whoever else is hired)

OK, let’s count … Sanders is going to have an internal auditor no matter what anyone else does. The city is going to hire an outside auditing firm to hire its books – there’s no choice.

What on earth is the point of also having an elected auditor general? How many auditors does it take to screw in a lightbulb?


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