Accounting

One myth about internal audit that is easily disproved

Published

9 months ago

November 3, 2025

For more than a decade, I have been trying to dispel lingering myths that haunt the modern internal audit profession.

Some of the myths are based on perceptions, such as “internal auditors are the corporate police” and “internal auditors can’t succeed unless others fail.” I have offered what I believe are compelling arguments on why these are simply myths. But there is one myth that is easily disproved by simply looking at the facts: “Internal auditing is just another corporate ‘bean counting’ function.” This simply isn’t true, and a little research will debunk this myth every time.

An essential element of risk management is understanding how risk impacts organizations beyond finances, including operations, competition, regulatory compliance and strategy. Indeed, it would be foolhardy for boards and executive management to focus solely on budgets and financial reporting.

What’s more, there is little argument that assurance and advisory services provided by internal auditing are essential to effective risk management. So, why does the myth persist that internal auditors are primarily glorified accountants?

Demystifying the “bean counting” narrative

The reality is that most modern internal audit functions spend less than a third of their time providing assurance over financial risk management, and recent data from The Institute of Internal Auditors bears this out. Financial reporting including internal controls over financial reporting, financial areas excluding ICFR, and fraud investigation make up about 28% of the average audit plan in North America, according to the latest IIA Pulse of Internal Audit report. In contrast, operational, non-ICFR compliance/regulatory, and IT/cybersecurity make up 50%.

It’s also important to note that the average North American chief audit executive lists cybersecurity and business resilience as top audit priorities ahead of governance/corporate reporting, according to the recently released Risk in Focus report from The IIA.

And yet, no matter what internal audit gets called to do, there will always be a cadre of misguided executives and board members who think internal audit is just an extension of the finance function. Of course, it doesn’t help that too often internal audit reports administratively to the organization’s chief financial officer. This unfortunately reinforces the view that internal audit must only be looking at numbers.

I covered the downsides to having internal audit report to the CFO in my September post, but let me address now why thinking of internal auditors as “bean counters” is simply dangerous in a modern risk environment.

The good news is that the data reflect that internal audit efforts are aligned with top risks, with cybersecurity at the top of the list. The bad news is that viewing internal auditors as primarily focused on finance makes an organization susceptible to weakening its audit function.

Key dangers of the “bean counter” bias

The accounting pigeonhole erodes audit priorities: Overemphasizing the need for internal audit services on financial risks while minimizing their value in combating nonfinancial risks is easier when boards and/or executive management think of internal audit as primarily a function of accounting. Whether conscious or unconscious, this bias is simply dangerous in a modern risk environment.

New risks won’t emerge from new math: In the 21st century, most new risks have emerged from groundbreaking technologies. Cyberattacks remain by far the biggest threat to organizations, and each innovation that presents new and exciting business opportunities invariably carries new and novel threats, as well. Artificial intelligence is an obvious example here. Even as organizations race to adopt and adapt AI to their processes and strategies, cybercriminals are leveraging the technology to enhance social engineering attacks by making them more convincing, personalized and hard to detect, with phishing and deepfakes being prime examples. These types of threats aren’t focused on financial reporting.

An audit team filled with bean counters will undoubtedly be less effective: Because today’s internal auditors are more likely to focus on fraud risks, compliance issues and myriad operational issues unrelated to accounting, their backgrounds should be as diverse as the operations they audit. An accounting degree won’t help as much as one in IT or computer science when auditing cybersecurity issues.

The reality is that most audit executives recognize this and prize internal auditors with strong analytic and critical thinking abilities, data-mining skills, business acumen and IT skills more than they do those who are extraordinarily proficient in accounting.

Recruiting internal audit talent is harder if the focus is on crunching numbers: The next generation of internal auditors must possess skills that address modern business risks. This requires recruiting the best minds in data analytics, computer science, engineering and psychology to fill the internal audit talent pipeline. That will be next to impossible if organizations view internal auditing as synonymous with accounting.

My hope is that leaders who understand modern risk management don’t buy the bean counter myth. Indeed, 65% of publicly traded companies globally have internal audit reporting directly to the CEO. But I’m deeply troubled that, according to Pulse data, nearly 8 in 10 (79%) of CAEs in publicly traded organizations in the U.S. still report to the CFO.

Accounting

Continuous Auditing Transforms Corporate ERPs

Published

3 days ago

July 21, 2026

Business Finance News

continuous auditing transforms corporate erps

As corporate accounting departments cross the threshold into late July 2026, the adoption of continuous, automated auditing systems has reached a definitive turning point. Driven by advances in artificial intelligence and deep integration with modern Enterprise Resource Planning (ERP) platforms, leading finance organizations are moving away from traditional, periodic post-hoc audits in favor of real-time, 100% transactional verification. This technological transition is redefining internal control environments, reducing compliance costs, and eliminating the structural delays inherent in legacy quarterly closing processes.

Unlike traditional auditing frameworks that rely on statistical sampling—a process that inevitably leaves operational blind spots—continuous auditing software monitors operational data feeds continuously. Every purchase order, electronic invoice, payroll disbursement, and cross-border wire transfer is automatically cross-referenced against established corporate governance parameters, regulatory tax schedules, and anti-fraud algorithms in real time. Anomalies or unauthorized ledger entries are flagged instantly, allowing internal audit teams to investigate and remediate compliance gaps immediately rather than months after the close of a financial period.

The implications for executive financial management are far-reaching. By embedding continuous verification directly into daily transaction workflows, chief financial officers gain uninterrupted visibility into the organization’s true financial standing. Real-time balance sheet auditing eliminates the severe operational bottlenecks associated with month-end and quarter-end financial reconciliations, freeing accounting professionals to focus on strategic financial modeling, tax planning, and capital allocation rather than manual data entry and spreadsheet consolidation.

However, implementing continuous auditing requires accounting leadership to invest heavily in data governance and technical upskilling. Internal audit teams must evolve from manual ledger reviewers into system architects capable of auditing complex algorithms and validating automated data pipelines. Accounting firms and corporate controllers that master continuous auditing will establish a resilient compliance framework capable of meeting stringent international regulatory standards with total transparency.

Accounting

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

Published

4 days ago

July 20, 2026

Business Finance News

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

WASHINGTON — In a major escalation of cross-border trade friction, U.S. President Donald Trump has signed executive orders imposing new 50% tariffs on a wide selection of Canadian exports, citing discriminatory practices by Ottawa targeting American auto, dairy, and beverage industries.

The new duties, announced Monday, will take effect in 30 days. They target a broad spectrum of consumer and industrial goods—ranging from wine, liquor, and milk products to commercial cement, furniture, clothing, and hockey equipment.

Untested Legal Mechanism

To enact the sweeping measures, the administration invoked Section 338 of the Tariff Act of 1930—a rarely used legal provision allowing the executive branch to levy additional tariffs of up to 50% on foreign nations deemed to discriminate against U.S. commerce.

White House officials noted that Section 338 addresses trade discrimination rather than national security or economic emergencies. The move comes months after prior global emergency tariffs faced legal challenges in domestic courts, signaling Washington’s pivot toward alternate statutory authorities to maintain import duties.

Senior administration officials briefed reporters that the measure directly responds to Canadian provincial bans on U.S. alcohol, restrictions on American vehicle exports, and import quota disparities affecting U.S. dairy and cheese producers relative to third-party trading partners.

“While the administration continues to secure reciprocal trade agreements globally, Canada retaliated against efforts to protect domestic industry,” U.S. Trade Representative Jamieson Greer stated.

USMCA Impact and Carve-Outs

Significantly, the newly ordered 50% duties will apply to designated items even if they otherwise comply with the United States-Mexico-Canada Agreement (USMCA).

However, the administration confirmed key targeted exemptions:

Energy products (including oil and natural gas)
Potash and critical minerals
Fish and seafood
Goods already governed by sector-specific duties (such as existing steel and aluminum tariffs)

Administration representatives emphasized that the tariffs do not stem from recent disputes concerning drifting Canadian wildfire smoke, noting that policy options regarding environmental spillover remain under separate review.

Canadian Response and Market Reaction

Following the White House announcement, the Canadian dollar experienced a sharp decline against the U.S. dollar, falling approximately 0.4% during evening trading.

Canadian Prime Minister Mark Carney issued a statement emphasizing that Canada’s earlier counter-duties had merely matched previous U.S. trade actions. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens,” Carney stated, pointing to detailed proposals Ottawa submitted to modernize the USMCA framework.

Ontario Premier Doug Ford took a firmer stance, urging a “dollar-for-dollar” reciprocal response if the measures go into effect on August 19.

With a 30-day implementation window before the duties officially lock in, industry associations and trade groups on both sides of the border are calling for urgent bilateral negotiations to avert further supply chain disruption across North America.

Accounting

Automated Continuous Auditing: Transforming Compliance and Real-Time Financial Oversight

Published

4 days ago

July 20, 2026

Business Finance News

Transforming Compliance and Real-Time Financial Oversight

The traditional accounting paradigm—defined by periodic monthly closures and post-hoc annual audits—is rapidly giving way to continuous, automated financial oversight. As of July 2026, forward-thinking accounting practices and multinational corporate finance departments are leveraging continuous auditing systems powered by advanced machine learning models. These systems monitor operational transactions in real time, shifting audit methodologies from sample-based post-analysis to absolute, 100% transaction-level verification.

The operational advantages of continuous auditing are transformative. Standard auditing procedures historically relied on statistical sampling, which, despite rigorous methodology, inherently left gaps where anomalies or fraudulent transactions could go undetected for months. Modern continuous auditing platforms integrate directly with enterprise resource planning (ERP) databases, instantly cross-referencing purchase orders, invoices, bank feeds, and tax records. Any deviation from established control parameters or unusual transaction behavior triggers immediate flags for internal audit teams, dramatically reducing detection lag from quarters to seconds.

Beyond fraud prevention, continuous auditing fundamentally alters internal reporting and decision-making. Executive leadership no longer has to wait weeks after the close of a quarter to evaluate precise financial standing; real-time verified ledger data provides an uninterrupted view of operating margins, tax liabilities, and cash flow dynamics. This real-time visibility enables corporate controllers to adjust capital allocation strategies dynamically, mitigating liquidity constraints and capitalizing on emerging commercial opportunities far more efficiently than competitors bound to legacy reporting cycles.

However, implementing continuous auditing requires accounting professionals to acquire new analytical capabilities. The role of the auditor is evolving from manual data reconciliation toward system validation, algorithmic model governance, and strategic risk interpretation. Accounting firms and corporate finance departments must invest in continuous technical education, ensuring that audit staff possess the data engineering skills necessary to design, maintain, and evaluate complex automated compliance systems.