"Where were you?" is the question asked of external audit when corporate failures hit the headlines – Carillion, BHS, Toshiba, Post Office and the CQC with a flawed inspection regime... is the same question aimed at internal audit?

Psychic abilities are not on the job profile for a chief audit executive! So to answer this question, we take a candid look at the role of internal audit and ask whether it is a reasonable expectation that internal audit has 20/20 foresight at all times.

The story behind the question

As the third line, internal audit has an important role in the corporate governance framework: to enhance and protect organisational value by providing risk-based and objective assurance, advice and insight.

Internal audit is often considered as the backstop within the organisation; the goalkeeper making a glorious save when the opposition break though the defence.

Organisational defences are more complex than a back four on the football pitch, making it virtually impossible for a team of internal auditors to be the corporate goalkeeper unless they individually mark every board member 24/7.

In reality the independence of the third line puts internal audit closer to the role of referee in a tight derby game: expert in diplomacy and the rule book, respected for fairness, issuing warnings and overseeing the action. Like the referee, audit leaders are constantly maintaining pace with the game and looking ahead to the next move.

When conducting his review of audit and governance, Sir Donald Brydon, voiced his frustration that the world of audit was being blamed for everything, he said “it is not auditors that cause companies to fail, that’s the result of the actions of directors”.

It is true of both external and internal audit. However, as internal auditors it is our responsibility to call out…