The Institute of Internal Auditors of Luxembourg, a chapter of the global IIA and affiliated with the European Confederation of Institutes of Internal Auditing (ECIIA) and L’Union Francophone de l’Audit Interne (UFAI) is representative of the internal auditing profession in Luxembourg, and came about as the profession grew to the extent that this country had its own demands and requirements for an authoritative body in this field. Nowadays, the IIA has over 400 members in this country, representing manifold companies and even industries, although the financial industry, understandably enough, is dominant. So what role does the IIA play in Luxembourg? Guy Queudeville, newly appointed successor to Ajmal Aziz Pervez as president of the IIA, states that “we keep up with international standards on the audit profession, organise and facilitate training and organise conferences on auditing or other internal control matters. We also give our opinion on auditing issues.” While membership numbers have grown over the past few years, at a rate of 5% per annum, Queudeville estimates, he doesn’t foresee much growth for the period of his mandate. He does however, expect membership to remain stable.

The current climate for auditing

The IIA is eyeing a predominantly stable period over the next couple of years, economic upheaval notwithstanding. But what of the internal auditing profession as a whole in Luxembourg? What will be the impact of the turbulence and scandals that have dogged the financial world over the past months? Queudeville has his ideas about the root causes of the crisis, yet is reluctant to talk about factors beyond his remit. In the context of his own profession? “We need to keep a common sense approach to internal and external control,” he insists. An important factor is knowledge of process. “In some instances, you still have tick-the-box auditing, without giving too much thought to the real, underlying risks. The international trend is that auditors should have a very sound operational knowledge and bring added value by analysing based on risk.” The financial crisis should bring this trend into sharper focus and make it “the trend of the future,” according to Queudeville.

There is also a belief in the stability of his profession. Significant external factors need not have an effect on internal auditing in this country. He also does not believe that there will be huge implications for the auditing profession arising from Luxembourg’s involvement in the Madoff affair, saying that “there will be no fall-out in the proper sense, but if the proper work is done across the board, then certain situations can be avoided. Once again, common sense must be maintained.” While he believes the IFRS requirements for fair value accounting could have been among the amplifiers of the crisis, he also considers them to have been a good idea at the outset. Queudeville believes unforeseen circumstances necessitate a change in the model, and that the IFRS requirements will undergo review.

At present it is difficult to know where we stand in terms of the economic situation. Lessons are being learnt but the full picture has not emerged. While the guidelines for internal auditing are in the midst of developing in a positive way, other reviews are underway in other disciplines. But what of internal auditing in Luxembourg? This country can still attract sufficient skills in sufficient numbers to maintain high standards, and Queudeville believes that most organisations will be holding onto their competent staff. After all, underlying knowledge of risk is more likely to yield results than finger-pointing. And going forward? Queudeville smiles and says “I’m moderately optimistic. But I’m not an economist...”