The function of internal audit has had to adapt to the change in risk as a result of the global economic crisis.

That was the finding of a group of experts speaking at the bermuda Chapter of the Institute of Internal Auditors (IIA) panel discussion held at Butterfield Bank's Rosebank Building on Friday.

The panellists, who included Sarah Farrington, CEO of Conyers Dill & Pearman, Jim Tait, executive vice-president of Alterra Capital, and John Kephart, president and CEO of Capital G Ltd., discussed everything from the priority of services expected from internal audit functions to expectations in the current financial and economic climate.

They also talked about measuring the success of internal audit and the role it plays in enterprise risk management and other regulatory parts of the business, as well as its function in acquisitions and related due diligence, in addition to sharing their experiences and insights with the audience.

Ms Farrington said the risks inherent in any business would shift in the event of an economic downturn, varying from company to company depending on their field and individual circumstances and therefore a risk-based approach should be taken to the function of internal audit.

Mr. Tait agreed with her point of view, adding that everything was constantly evolving and internal audit needed to keep up with those changes along with the fundamentals in order to ensure it maintained an added value to the business.

""If you are going about your day to day business doing the same things you did for an extensive period of time you probably don't have your focus in the right place because the world is always changing around us," he said.

Mr. Kephart said the key during a downturn was to focus on rationalising the likes of theft and fraud, with a shift in the behaviour of clients and less cash flow over such periods to contend with, and the requirement to produce risk models of the business by regulators and making sense of it all.

All of the panel gave an overview of the structure of internal audit within their respective organisations, from a legal, insurance and banking perspective and the reasons for their various approaches, in addition to the challenge of finding the right skill sets to successfully carry out the function.

Mr. Kephart said that regular 360 reviews were critical to gauging the effectiveness of the team and their impact on the organisation, as well as their ability to respond and tackle the issue when risks do arise, while Ms Farrington stressed the importance of having a fresh set of eyes looking at the numbers and offering possible changes and improvements to the way of doing things.

Specifically addressing the subject of mergers and acquisitions, Mr. Tait said that in his experience and that of his company, no two transactions were the same, with different people and mitigating factors involved in the process, as well as a differing set of objectives from firm to firm, but at some point due diligence had to be met and having the right people in place to achieve that.

The event was followed by the IIA Annual General Meeting and the distribution of a series of flyers on the value of internal auditing for stakeholders.

For more information about the IIA or internal auditing visit the website at www.theiia.org/theiia/about-the-profession