In periods of crisis companies consider cutting costs in response to a general fall in demand and revenues. Cuts must be made to operative costs as well as to general expenses and services. As the IAF is a “central” service that affects compliance and the corporate governance process, we can assume that it suffers in times of crisis and eventually may have its budget reduced. On the contrary, recent corporate scandals and frauds seem to have required a stronger “culture of control”, a better corporate governance system, more thorough auditing activity and more adequate business risk management - activities that the IAF can enforce [IIA]. Which of these two contrasting situations is more relevant? Is one of them more dominant or could they be combined somehow? How can a company follow a general reduction of costs, if necessary, without losing control and without decreasing the reliability of the corporate governance process? How do they envision the IAF in a period of crisis? In order to find an answer to the questions above, we submitted a questionnaire to Italian companies listed on the main Milan Stock Exchange as of 1 January 2009. Thirty companies out of 249 listed replied to the questionnaire. The results showed that there is a third way - a compromise. No cuts but a stable or slightly increased IAF budget. Moreover, there is evidence that the activity of the IAF is expanding (becoming broader and more thorough). In fact, auditing is not limited to financial or operational activities but it also applies to the corporate governance as well as to model “231” (an Italian model to prevent corporate crime) and strategy. Furthermore, the IAF will be involved in the ERM process, becoming an aid and a support, and will be crucial in the deterrence of fraud. In other words, we have found that the challenge is real as stated in Ernst & Young’s 2008 report “Escalating the Role of IA”. PWC research results from 2009 also pointed out an increase in fraud. How should we view these new tasks in the general framework of the IA mission statement? Are they fully compatible? How can we maintain independence of the IAF? These and other questions will be analysed in relation to the main literature, the current position of the principal bodies of auditors and job consultants.
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