Accounting
IIA CEO looks ahead as internal audit expands globally
Anthony Pugliese, president and CEO of the Institute of Internal Auditors, is traveling the world as his organization expands globally, while laying the groundwork for priorities in the decade ahead.
The IIA released its
“There are a lot of misconceptions about what internal audit is,” he told Accounting Today. “The current perceptions do not align with what the profession actually does.”
The report points to the need for internal auditors to embrace advanced technology. “We can see our members all basically think technology is critical, but we’re not seeing the kind of uptake that would actually demonstrate that we’re going to be known for being technology savvy,” said Pugliese.
The report recommends internal auditors need to expand the entire scope of the work they’re doing. That aligns with a separate set of
Other priorities include connecting internal audit with the strategy of a company as well as growing the pipeline of internal auditors.
“When we position internal audit in front of a bunch of accounting students, the reaction is actually really positive,” said Pugliese. “They see it as a completely different path, and one that doesn’t carry the reputation negatively of public accounting, which I think they’re trying to get away from. Actually we’ve seen a lot of students get excited by the fact that they can become internal auditors and still work for a big firm. So the two can actually co-exist on their resume, on their CV, and that’s really attractive.”
Internal auditors have increasingly become fraud fighters. “We found out in our Vision project that more and more internal auditors are becoming responsible for functions other than internal audit,” said Pugliese. “What we’re seeing now is that they’re moving functions like compliance or fraud into internal audit’s bailiwick.”
Pugliese is seeing growing interest in climate change and sustainability risks.
“Last year, in 2023 our members around the world rated climate change sustainability reporting as the 14th most prevalent risk, and then this year, it moved to 13,” he said. “But in three years, our members predict it’ll be either four or five.”
The IIA released its updated
The IIA has been releasing tools to help internal auditors adjust to the updated standards. “Getting ready for the standards has been a big deal for us,” said Pugliese. “We’ve been releasing tool after tool after tool, some free, some we charge for, because the world that relies on internal audit is affected as well.”
The IIA is seeing more demand for such material as the organization expands globally. “You could pick up an internal auditor’s opinion on cyber and it would carry the same weight in Africa as it would in Latin America or North America, that there could be a level of reliance, and that’s because of all of our advocacy work, that we felt that was important,” said Pugliese. “We get out there and tell governments, you can rely on internal auditors to help you do some of this work. Having a standard around topics is not very unusual in the accounting world, but it is in the internal audit world.”
The IIA has been growing and has now crossed the 250,000-member mark. “We’ll end up this year probably at 255,000 with a lot of growth occurring in Asia and the Middle East, which is great,” said Pugliese. “We really didn’t have a strong market in the Middle East even five years ago, so we’re happy about that.”
He has been finding growing interest in Saudi Arabia, Oman and other Gulf countries, as well as parts of Asia like China and Japan. The Saudi Minister of Audit sits on the IIA’s global board.
“When they give out awards to say this is the best internal audit team of the year, or the most innovative team of the year, it’s a really big deal,” said Pugliese.
He noted that many countries around the world have what they call Supreme Audit Institutions, SAIs, and there’s an association for these Supreme Audit Institutions known as INTOSAI, the International Organization of Supreme Audit Institutions. The IIA has been getting more involved in such groups.
In the U.S., the IIA has also been working more closely with the Public Company Accounting Oversight Board after
The IIA started a letter-writing campaign and met with four of the PCAOB’s board members, including a former internal auditor, Christina Ho. Eventually the objectionable section was deleted in the final version of the standard, and the PCAOB even apologized in the disposition of comments.
“You couldn’t ask for a better outcome,” said Pugliese. “It was no disrespect, no harm intended. But, because of that, we started a relationship and now, when they call and they want to have a really solid task force on any given topic, they’ll reach out to us for an internal auditor, and that really is nice. So it was kind of lemonade out of lemons as a result of that, but it was not a fun process to go up against the PCAOB.”
The IIA started its own political action committee last year and plans to do more advocacy work in the U.S. and abroad. “We’re introducing some advanced advocacy strategies next year to start lobbying national governments outside of the United States,” said Pugliese. “They’re not quite used to the system that we have in place, where you hire people in Washington, and they target the right people setting laws that are relevant to you, and you go talk to them, and hopefully you get an output. This is very different. We’re doing it in Africa and we’re trying to make sure that their advocacy needs are met. We’ll probably have one in the Middle East, which is very unusual, but that’s more of an informing function for the countries that are more monarchy based. You don’t typically lobby a monarchy. In Latin America as well, we’re going to start lobbying those governments to more adequately recognize what internal audit does.”
The shadow knows; body of evidence; make a Note of it; and other highlights of recent tax cases.
Newark, New Jersey: Thomas Nicholas Salzano, a.k.a. Nicholas Salzano, of Secaucus, New Jersey, the shadow CEO of National Realty Investment Advisors, has been sentenced to 12 years in prison for orchestrating a $658 million Ponzi scheme and conspiring to evade millions in taxes.
Salzano previously pleaded guilty to securities fraud, conspiracy to commit wire fraud and conspiracy to defraud the U.S., admitting that he made numerous misrepresentations to investors while he secretly ran National Realty. From February 2018 through January 2022, Salzano and others defrauded investors and potential investors of NRIA Partners Portfolio Fund I, a real estate fund operated by National Realty, of $650 million.
Salzano and his conspirators executed their scheme through an aggressive multiyear, nationwide marketing campaign that involved thousands of emails to investors, advertisements, and meetings and presentations to investors. Salzano led and directed the marketing campaign that was intended to mislead investors into believing that NRIA generated significant profits. It in fact generated little to no profits and operated as a Ponzi scheme.
Salzano stole millions of dollars of investor money to support his lavish lifestyle, including expensive dinners, extravagant birthday parties, and payments to family and associates who did not work at NRIA. He also orchestrated a separate, related conspiracy to avoid paying taxes on his stolen funds.
He was also sentenced to three years of supervised release and agreed to a forfeiture money judgment of $8.52 million, full restitution of $507.4 million to the victims of his offenses and $6.46 million to the IRS.
Marina del Rey, California: Tax preparer Lidiya Gessese has been sentenced to 41 months in prison for preparing and filing false returns for her clients and for not reporting her income.
Gessese owned and operated Tax We R/Tax R Us and Insurance Services from 2013 through 2019 and charged clients $300 to $800. Gessese would then prepare returns that included claims to deductions and credits she knew her clients were not entitled to, including falsely claiming dependents, earned income credits, the American Opportunity Credit, Child Tax Credits, business deductions, education expenses or unreimbursed employee business expenses. The illegitimate claims led to some $1,135,554.64 issued by the IRS for 2010 through 2018.
She failed to report, or underreported, her own income for 2010 through 2018, some of which included improperly diverted funds from clients’ inflated or fraudulent refunds, causing a tax loss of $488,276.
Gessese, who pleaded guilty in April, was also ordered to pay $1,096,034.01 to the IRS and $53,526.95 to her other victims.
Fullerton, California: In Chun Jung of Anaheim, California, owner of an auto repair business, has pleaded guilty to filing false returns for 2015 to 2022, underreporting his income by at least $1,184,914.
He owned and operated JY JBMT INC., d.b.a. JY Auto Body, which was registered as a subchapter S corp. Jung was the 100% shareholder.
Jung accepted check payments from customers that he and his co-schemers then cashed at multiple area check cashing services; the cashed checks totaled some $1,157,462. Jung withheld the business receipts and income from his tax preparer and omitted them on his returns.
He will pay $300,145 in taxes due to the IRS and faces a $250,000 penalty and up to three years in prison. Sentencing is Jan. 31.
Tucson, Arizona: Tax preparer Nour Abubakr Nour, 34, has been sentenced to 30 months in prison.
Nour, who pleaded guilty a year ago, operated the tax prep business Skyman Tax and for tax years 2016 through 2018 prepared and filed at least 27 false individual federal income tax returns for clients.
These returns included falsely claimed business income that inflated refunds so that he could pay himself large prep fees. Nour’s clients had no knowledge that he was filing false tax returns under their names.
Nour was also ordered to pay $150,154 in restitution to the United States for the false tax refunds.
Farmington, Connecticut: Tax preparer Mark Legowski, 60, has been sentenced to eight months in prison, to be followed by a year of supervised release, for filing false returns.
From January 2015 through December 2017, Legowski was a self-employed accountant and tax preparer doing business as Legowski & Co. Inc. He prepared income tax returns for some 400 to 500 individual clients and some 50 to 60 businesses.
To reduce his personal income tax liability for 2015 through 2017, Legowski underreported his practice’s gross receipts by excluding some client payment checks. He then filed false personal income tax returns that failed to report more than $1.4 million in business income, which resulted in a loss to the IRS of $499,289.
Legowski, who
Wheeling, West Virginia: Dr. Nitesh Ratnakar, 48, has been convicted of failing to pay nearly $2.5 million in payroll taxes.
Ratnakar, who was found guilty of 41 counts of tax fraud, owned and operated a gastroenterology practice and a medical equipment manufacturer in Elkins, West Virginia. He withheld payroll taxes from employees’ paychecks and failed to make $2,419,560 in required payments to the IRS. Ratnakar also filed false tax returns in 2020, 2021 and 2022.
He faces up to five years in prison for each of the first 38 tax fraud counts and up to three years for the remaining counts.
Orlando, Florida: Two men have been sentenced for their involvement in the “Note Program,” a tax fraud.
Jasen Harvey, of Tampa, Florida, was sentenced to four years in prison and Christopher Johnson, of Orlando, was sentenced to 37 months for conspiring to defraud the U.S.
From 2015 to 2018, they promoted a scheme in which Harvey and others prepared returns for clients that claimed that large, nonexistent income tax withholdings had been paid to the IRS and sought large refunds based on those purported withholdings. The conspirators charged fees and required the clients to pay a share of the fraudulently obtained refunds to them.
Overall, the defendants claimed more than $3 million in fraudulent refunds on clients’ returns, of which the IRS paid about $1.5 million.
Both were also ordered to serve three years of supervised release. Johnson was also ordered to pay $864,117.42 in restitution to the United States; Harvey was ordered to pay $785,858.42 in restitution. Co-defendant Arthur Grimes will be sentenced on Jan. 13.
Ft. Lauderdale, Florida: Tax preparer Jean Volvick Moise, 39, has been sentenced to three years in prison for filing false income tax returns.
Moise prepared false returns for clients to inflate refunds. He prepared returns which included, among other things, false dependents, false 1099 withholdings, false educational credits and false Schedule C expenses, often for businesses which did not exist. Moise’s fee was larger than the typical one charged by a tax preparer.
Moise filed hundreds of false returns that caused the IRS to issue more than $574,000 in fraudulent refunds.
With 2025 almost upon us, it’s worth thinking about what the new year will bring, and what accounting firms expect their next 12 months to look like.
With that in mind, Accounting Today conducted its annual Year Ahead survey in the late fall to find out firms’ expectations for 2025, including their growth expectations, their hiring plans, their growth expectations, how they think tax season will play out and much more. The overall theme: Thing are going well, but there are elements of friction holding them back, particularly when it comes to moving to more of a focus on advisory services.
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