April 2013

Is your internal audit function on the leading edge?

On March 4, 2013, Nasdaq issued a proposed new rule that, if approved by the Securities and Exchange Commission, will require listed companies to establish and maintain an internal audit function.  This proposed rule mirrors a similar requirement for companies listed on the New York Stock Exchange.   The rule would apply to companies listed on Nasdaq on or before June 30, 2013, and they must establish an internal audit function no later than December 31, 2013. A company listed after June 30, 2013, must establish the function prior to listing.  Although this new rule applies to current or future Nasdaq listed companies, the message is clear and it applies to every organization.  The existence of an independent internal audit function to establish and manage formalized risk management processes and systems of internal control is critically important.

This proposed rule provides an organization, an executive or an audit committee/board member the perfect opportunity to assess 1) the existence, competency, effectiveness, reporting relationships and policies related to internal audit, 2) the adequacy of risk management practices and 3) the maturity of the internal control environment.

We offer some questions to help assess the maturity of your organization's internal control environment:

  • Do we have an internal audit function?  If no, have we properly documented the rationale?  Should we revisit?
  • How do we develop and establish an internal audit function?
  • Is our internal audit function properly staffed?  Do we have the appropriate resources?
  • Do we need an internal audit function but are resource constrained?
  • Are we planning an IPO in the near future?
  • Do we have an audit committee charter and appropriate policies in place?
  • Is the internal audit function managing the most critical risks from an enterprise level?
  • When was the last enterprise risk assessment performed?

ParenteBeard offers a wide range of services to help to improve your internal control environment.  We offer internal audit outsourcing and co-sourcing, staff augmentation and enterprise risk management services including initial implementations and maturity assessments.  We have experience “starting up” new internal audit functions and can help guide any organization through the process in an efficient and effective manner.

Please contact ParenteBeard for more information.

Michael Schneider, Partner
E: Michael.Schneider@ParenteBeard.com
P: 610.969.7366
C: 908.358.4030

Jeff Krull, Partner
E: Jeff.Krull@ParenteBeard.com
P: 215.557.2223
C: 215.380.0473
ParenteBeard LLC: Confidence Through Clarity