Tuesday, January 30, 2007

IIA Cites Linkage between Internal Auditing and Social Responsibility

As a comprehensive approach to integrity and trustworthiness of the financial area of businesses, the Institute of Internal Auditors (IIA) are looking at corporate social responsibility (CSR). Also known as sustainable development, welfare capitalism and corporate good works, an increasing number of businesses are coordinating CSR with operational and financial goals. Internal Auditor Jim Key mentions that internal auditors are not limited to financial issues and their emphases on effectiveness and compliance fit well with the CSR concept. To support Key's point, a survey of internal auditors indicated that over 90% believed that internal auditors could add value to CSR reporting. Key also indicated that Europe is ahead of many American corporations in CSR reporting (one example: the ISO 14000 series on environmental reporting).
A new IIA seminar on CSR will be available this summer and IIA Vice President of Educational Programs Stacy Manzaris indicates that the seminar will enable businesses to apply CSR principles to help with risk management and improve their competitive position.

Although the late formidable Milton Friedman was no fan of social responsibility, a large body of academics, consultants and business executives have concluded that benevolent behavior by large and middle-sized corporations is good for society and that CSR is best developed by business managers rather than government fiat. Given the emphasis on effectiveness and compliance, it is legitimate for internal auditors to seek to participate in the growth of CSR; by no means are internal auditors the only accountants which should be involved in finding ways to bring high levels of ethical behavior, community-mindedness, respect for employees and customers and careful use of natural resources into American businesses.


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