LONDON, July 7 (Reuters) - Checks on whether risks in companies are being properly managed should include tackling bad attitudes and behaviour among staff to stop scandals, a UK-based professional body said on Monday.
The Chartered Institute of Internal Auditors launched a report that looks at ways to improve company culture after a string of scandals such as loan insurance mis-selling and interest rate benchmark rigging at banks.
Last month Britain’s biggest payday lender Wonga was fined $4.4 million for sending customers bogus letters from non-existent law firms that threatened legal action.
Internal auditors are employees of a company who are meant to challenge top executives if risks are not being managed adequately.
Andrew Bailey, who heads Britain’s banking watchdog, the Prudential Regulation Authority, has said that scandals at banks showed that internal auditors at banks have not been up to the job.
The institute’s report calls for internal auditors to go beyond a focus on controls and to undertake a “root-cause” analysis to identify cultural weaknesses in their company.
Internal auditors should not only just check the “tone at the top” of the company but on culture throughout the organisation, it said.
“As organisations come under increasing pressure to demonstrate their commitment to improving standards of behaviour they must focus more closely on getting the underlying culture which dictates those behaviours right,” the institute’s chief executive Ian Peters said in a statement.
The move to go beyond box-ticking to examine wider issues of culture echo a step announced by Barclays on Thursday.
The UK bank, itself fined for rigging an interest rate benchmark, has created a Compliance Career Academy to train its compliance staff to go beyond their traditional role and act as mentors to improve culture and behaviour. (Reporting by Huw Jones; Editing by Susan Fenton)