You have recently been employed as the manager of internal audit for a large multinational financial services company. It is clear to you that you have been given the job because of your reputation as a troubleshooter, your extensive experience with financial institutions, and your widely acknowledged expertise in information systems audit and control. You have attained a high profile, for example, because of the excellent work you undertook when you were president of the local chapter of the Information Systems Audit and Control Association.

The company has just been through the most difficult 12 -month period of its history, and the company's management is still striving to turn the company around. The primary source of the difficulties has been a major fraud that was discovered 14 months ago. The nature of the fraud is complex, but basically it involved collusion among several senior managers and financial traders to use investors' funds improperly. The fraud was "accidentally" uncovered by the company's external auditors. When federal officials began to investigate the activities of the company in detail, they also discovered other irregularities-for example, evidence of insider trading by senior personnel within the company.

When the federal investigation was complete, it was damning of the company's management and, in particular, the performance of internal audit staff. The federal investigators found that some critical internal controls were weak or nonexistent. They focused especially on the poor state of controls in some of the company's major computer systems.

The chair of the board of directors reacted immediately to the report by asking that the manager of internal audit (your predecessor) be fired. A number of senior personnel within the company were also fired, and some have been charged with criminal offences. Many of the company's long-standing clients and customers took their business elsewhere. As a result, the company's share price plummeted. Angry shareholders demanded the resignation of the chair of the board of directors. After substantial pressure, she resigned, along with half the other board members.
You have a good understanding of the situation you now face. You believe you have the full support of the new chair of the board of directors. Indeed, she has met with you several times to discuss various problems with you and to assure you of the board's support in discharging your responsibilities. She underscores the need to establish a vibrant, effective, efficient internal audit group within the company and to rectify deficiencies in the company's internal control systems, especially those associated with the company's computer systems.
The internal audit staff, however, are demoralized. Since the departure of the previous internal audit manager, they have been reporting to a temporary manager who has accounting skills but few audit skills. Most of the audit group have tried to leave the company, but they have been unable to find jobs elsewhere. The criticisms levied against the internal audit group by the federal investigators are now widely known in the marketplace. As a result, the internal auditors cannot find other positions because their reputations are tarnished. Moreover, the one internal auditor who has expertise in information systems audit and control resigned shortly after the fraud was discovered to take up work as a full-time musician. (She plays clarinet in an up-andcoming jazz quartet.) Attempts were made to replace her, but it seems that good information systems auditors now are not willing to join the company because of its poor reputation.
You have also found that the company's managers now have a high level of mistrust of the internal audit group. They, too, have had their reputations tarnished by the events that have occurred. Moreover, with the company's downturn, their compensation has been affected adversely. They blame the internal audit group for many of the problems they now face.
Required: Outline your strategies to revitalize the internal audit group within the company. In particular, discuss the leadership strategies you will use with the internal audit group to restore morale and motivate staff, the ways in which you will build up information systems audit and control expertise within the group, and the approach you will use to try to reestablish good relationships between the internal audit group and the managers who will be the group's clients.