Audit committees lack assurance. (Update).

A RESEARCH STUDY recently conducted by The Institute of

According to the institute's survey, which polled heads of internal auditing in the United Kingdom, only 23 percent of audit committees asked their internal auditors for assurance in the wake of financial accounting disasters such as WorldCom and Enron.

The research study, "WorldCom Survey," indicates that those internal audit heads who were approached for extra assurance were asked about two main areas: the scope, role, and effectiveness of internal auditing and the quality, independence, and scope of external auditing. Specifically, 52 percent of these respondents were asked for assurance on financial and accounting control, 36 percent were approached about the quality of opinions provided by the external auditors, and 24 percent received inquiries regarding internal auditing's role in detecting and preventing financial statement fraud.

Still, few heads of internal auditing, overall, were asked to comment either on compliance with global accounting policies or on the value added by external auditors. In fact, less than half of the survey respondents were consulted on the appropriateness of accounting policies.

"All audit committees should be at least reviewing the scope of the assurance that they expect to receive from internal audit," says IIAUK Deputy President Richard Nelson, commenting on the survey results. "Both WorldCom and Enron show that boards and shareholders cannot rely solely on the views of their external auditors, particularly given the high-octane commercial pressures of the markets. Internal audit is an essential, independent viewpoint that audit committees should be making full use of."

For more information on the survey results, visit the IIA-UK's Web site at www.iia.org.uk.