Five years ago this week, I had the distinct privilege of joining several IIA colleagues on the podium of the New York Stock Exchange (NYSE) to ring the opening bell. This once-in-a-lifetime experience was one of the highlights of my 12 years as The IIA’s CEO. It’s a memory I cherish for many reasons, not the least of which was the NYSE’s acknowledgement of The IIA’s 75^th anniversary. This year The IIA is celebrating its 80^th anniversary, and it’s an appropriate time to remind ourselves what this profession does to foster trust in institutions around the world.

I retain many vivid memories of the NYSE ceremony on June 30, 2016, but one that I have replayed in my mind many times occurred behind-the-scenes before the opening bell. It was in a small conference room off of the trading floor that an executive of the NYSE praised the work of The IIA and indicated the pride the exchange felt in featuring our brand as part of that day’s opening-bell proceedings. In a time when investor trust was slowly rebuilding in the wake of the great financial crisis of 2008, it was inspiring to know that the NYSE recognized internal audit’s value to the organizations it serves and its crucial role in good governance.

The value internal auditors provide for publicly traded companies like those listed on the NYSE is significant. However, unlike government auditors, external auditors and others, the work of internal auditors in publicly traded companies is often carried out behind “closed corporate doors” with little fanfare. Each year, internal auditors around the world in companies large and small provide management and their boards with advice and assurance on the effectiveness of risk management and internal controls within their companies. Their tireless efforts result in more efficient and effective corporate operations and reduced risk of waste, mismanagement and fraud.

Most investors are clearly motivated by returns on their investments and the increased share values of the companies in which they invest. But as we have seen too many times, trust is a key element in decisions to invest. Investors must trust the financial information they are provided, the competence and effectiveness of management, and the diligence of their boards of directors. When any or all of these fail, investors grab their money and head for the hills – often reluctant to invest again until trust is restored. The volatility in the capital markets of the 21^st century has been driven as much by wavering trust of investors as any other factor.

I agree with former Australian Prime Minister Kevin Rudd who observed, “The stability of global financial markets is a public good.” For more than a decade, I have been arguing that “internal auditors in the corporate sector serve the public good by fostering trust in the capital markets.” By providing management and boards with timely and relevant assurance and insights on risk, control and governance, internal auditors are helping their companies earn and maintain the trust of investors that is so vital to the success of their companies and ultimately the capital markets. Author Frank Sonnenberg has observed that “Trust is like blood pressure. It’s silent, vital to good health, and if abused it can be deadly.”  I believe internal auditors are vital to maintaining the kind of corporate health to which Sonnenberg refers.

Despite the impressive post-Covid performance we are witnessing in the current capital markets, there are still far too many risk management failures (such as cyber-security) and financial reporting scandals involving well-known companies around the world. These failures not only rock investor confidence, they also embolden activist investors, and invite greater regulatory scrutiny and mandates.

These scandals along with several additional factors also feed a distrust of corporations and those responsible for financial reporting and auditing that often lurk just below the surface. As I have observed before, distrust in the corporate sector is often self-induced by C-suite executives who appear disconnected from the plight of the average worker, boards who defer to management rather than provide true oversight, and misaligned or toxic cultures. The need for independent, strong and well-resourced internal audit functions in the corporate sector has never been more critical.

In a blog celebrating the NYSE event in 2016, I urged internal auditors to undertake self-appraisals to ensure they are serving their companies to the best of their abilities. Some key questions in this self-appraisal should include:

• Are reporting lines to management and the audit committee clear and distinct? A clear separation of administrative and functional reporting supports internal audit independence.
• How strong is the current relationship with management and the board/audit committee? Strong communications and trusting relationships are integral to good governance.
• How are audit recommendations viewed by management, and how readily are they implemented? This serves as a solid barometer of management’s desire to “do the right things” to ensure a sustainable future for the company and maintain shareholder trust.
• Is internal audit sufficiently resourced to address the risks of the organization properly? This is another measure of the organization’s commitment to good governance.
• Does the audit committee take the lead in CAE hiring, firing, review, and compensation? Too often audit committees abdicate these responsibilities to management, which can erode internal audit independence.

The IIA ringing the opening bell at the NYSE in 2016 should have been a clarion call for all organizations — not just publicly traded companies — to embrace their roles in building and maintaining trust in the organizations they serve. While progress has been made, much remains to be done as we quietly go about fostering trust in our companies and the capital markets.