ALTAMONTE SPRINGS, Fla. – As Enron Corp.'s relationship with its auditor, Arthur Anderson continues to come under heavy fire, one trade group has reemphasized the need to spot red flags and be aware of sudden and questionable changes in management style. The Institute of Internal Auditors (IIA), an international association with 75,000 members in internal auditing and risk management has beefed up its stance on assessing risks in financial reporting including posting online surveys to garner feedback on verification practices. "We've heard from more than 300 of our members, and some of the directors polled are saying they were not aware of some risky transactions, others are questioning whether there was a dichotomy between what the auditors were seeing and what the directors were seeing," said Bill Bishop, IIA's president. It's these types of discrepancies that heighten the need for a review of internal audit practices, Bishop emphasized. To start, the IIA has listed a number of cautions on its Web site, www.theiia.org, which urge auditors to be aware of "aggressive" accounting practices used to meet analysts' earning estimates. The trade group also alerts members to be careful about pensions funded solely or substantially with company stock as was the case with Enron. The Association of Credit Union Internal Auditors (ACUIA) mirrors the IIA standards with just as strong an emphasis on promoting a separate, independent audit function, cohesion between the internal auditor and supervisory committees and ongoing training, said Randy Manscill, ACUIA board member and recent chairperson of the 600-member group. Manscill is also chief audit executive for America First Credit Union in Odgden, Utah. "Enron will be one of those defining events for our industry because it emphasizes our ongoing promotion of a separate set of eyes and ears that are necessary in an organization," Manscill said. "We don't think outsourcing is the best option. We've always promoted the idea of a credit union hiring someone to be the chief audit person." The IIA has listed a number of areas that deserve scrutiny including:

being aware of aggressive accounting practices employed in response to pressure to meet analysts earning estimates;

keeping in mind that managers who are notable for their creativity are often the very same managers who take the biggest risks;