To whom should your internal auditor report?


We've discussed before the reporting chain that governs internal audit resources, which often ends up with deliverables ordered by the audit committee as well as the CFO. The reporting lines may be a bit fuzzy at some companies. At other companies, audit committees seem intent on having audit executives report to them. For the record, Moody's Investors Service's best practices report says having your chief internal auditor report to the CFO can cause some conflicts of interest and may undermine his or her ability to perform. But rather than report to the CFO, the best bet would be to have the auditor report to the CEO--and of course the audit committee. That sends the right message: That senior management is involved but in a way that minimizes conflicts. Any way you cut it, audit executives have tough jobs. Strong relationships with key directors are paramount. An area worth investing in.

For more on Moody's report:
- Here's an article from