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By conducting the 2006 global Common Body of Knowledge (CBOK) study, The Institute of Internal Auditors (IIA) attempts to better understand the expanding scope of internal auditing practice throughout the world. The purpose of this review of recent internal auditing literature in Europe is to document how the internal audit function is changing in response to the shifts in global business practices.

The literature in Europe is reviewed with a focus on developments that have implications for the expanded scope of internal auditing and the changing skill sets of internal auditors and their role in enhancing good corporate governance. This focus has implications for CBOK 2006.

The literature indicates changes in the activities performed by internal auditors. The increasing complexity of business transactions, a more dynamic regulatory environment in Europe, and significant advances in information technology have resulted in opportunities and challenges for internal auditors. Although in 2004, The IIA responded to the changing organizational environment by updating the professional practices framework, more work needs to be done to prepare internal auditors for the expanded set of skills and knowledge required to perform audits of the future.

By presenting an overview of past literature in Europe and discussing the shifting demands on internal audit services, the researchers hope to motivate further research in the field.

After the Royal Ahold accounting scandal occurred in 2003, the Dutch government responded by publishing a new Corporate Governance code, often referred to as the “Tabaksblat Code”, updated in 2016. The Code focuses on long-term value creation by emphasizing risk management and accountability and reinforcing the roles and duties of management board, internal audit function, and supervisory board in designing adequate risk management and control systems and in assessing their effectiveness. Differently than the rule-based Anglo-Saxon regulations, the Code is based on best practices provisions and adopts a “comply or explain” approach. Professional bodies are actively supporting their associates in developing skills in current and emerging risk management areas. Despite these efforts, it is worth noting that there are still significant differences on how companies apply the risk management provisions. For instance, in terms of appointing a dedicated manager as Chief Risk Officer (CRO), in the frequency and scope of risk assessment, and in defining the risk appetite of the company.

Using the global financial crisis as a critical event and based on institutional theory and stakeholder theory, this paper aims to explore the relationship between corporate governance and corporate social responsibility (CSR). The question is how stakeholders can influence corporate responses to societal change by using their position in the governance structure.

The analysis is based on a historical analysis of data collected mainly between 2002 and 2004. The historical perspective enables an understanding of the response of the company to environmental changes.

The approach enables researchers to relate the normative component of CSR to specific governance mechanisms. These governance mechanisms are specified in direct and indirect influence pathways. Historical data shed light on how, in the upbeat of the crisis, stakeholders have influenced the principles and policies of the ING Group, a Dutch financial company.

The paper suggests that stakeholders influence principles – normative assumptions that guide corporate decisions – mainly in dialogue-based meetings (direct influence pathways). Companies are made accountable in indirect influence pathways such as regulations. The author also demonstrates that a historical approach enables an understanding of long-term historical developments and the linking of corporate policies to the normative assumptions of stakeholders.

If stakeholders wish to assess the social responsibility of a company, then they should assess the governance structure in relation to the principles and policies. The power structure within a company and that within the institutional framework in which the company operates (the governance system) strongly influences how a company executes its social responsibilities.

The paper demonstrates how stakeholders can use the governance structure to influence a bank. If society – or a specific group in society – wants banks to play a different role, this paper points to what could be the levers of change in the governance system and the governance structure.

Insights into the complex relationship between corporate governance and the processes in which the social responsibilities of a company are developed.