New IIA Pulse Report Shines a Bright Light on the State of Internal Audit!

For the 14th year in a row, The IIA is using its extraordinary reach to survey the internal audit profession in North America, and once again, the results shine a bright light on key trends, emerging risks and important opportunities for the profession. The 2022 North American Pulse of Internal Audit report has just been released, and it doesn’t disappoint!

This year, The IIA surveyed more than 500 senior internal audit leaders – more than 85% of whom are CAEs. Respondents were primarily from organizations headquartered in the United States (83%) and Canada (10%). As in past years, audit leaders were surveyed on key resource trends and internal audit’s plans and priorities. The report is organized around four key areas;

• Budget and staff
• Risk and audit plans
• Trends for risk and audit
• Leadership metrics

With more than a decade of data upon which to draw, the report paints a compelling picture of important trends:

• Budgets and Staffing Levels. The report concludes that there is “continued uncertainty and cautiousness” when it comes to internal audit resources as the pandemic enters its third year. Survey data indicates that “budgets and staff levels held up year-over-year, but organizations have generally stopped short of giving internal audit more resources.” In fact, the survey disclosed the second-lowest percentage in its history of internal audit departments that experienced increased staffing. The report specifically notes that travel budgets continue to endure widespread, sustained reductions.
• Staff Turnover. The report offers data around the Great Resignation’s impact on the profession, “with many functions reporting voluntary turnover as the reason behind staff decreases” during the past year.
• Risk. As with other recent surveys on the profession, Pulse does not observe a significant dedication of internal audit resources to ESG coverage, but as the IIA observed, “for the first time in the survey history, sustainability and non-financial reporting risk levels edged upward, especially for publicly traded organizations.”
• Audit Plans. While not the risk to which the highest number of internal audit resources are dedicated, the report does note that “cybersecurity is trending up on audit plans for all respondents.” Pulse again observes that internal audit departments in publicly traded companies are dedicating a significant percentage of resources to Sarbanes-Oxley coverage.

Unlike reports from previous years, in which survey statistics were accompanied by extensive analysis, this year’s Pulse report is back to the basics in many ways. It is packed with data and an impressive array of graphs and charts depicting internal audit trends, including trends by sector and industry. It’s a perfect benchmarking tool for leading internal audit teams and those that are striving to get there.

As I reviewed the report, I was struck by several choice sections that shined a light on topics not routinely included in internal audit surveys:

• Responses on where internal audit leaders would invest additional resources if they had them.
• Data indicating additional “hats” the CAE wears in addition to internal audit.
• The top three concerns for leading internal audit functions.
• How COVID impacted internal audit compared with the overall enterprise.
• How internal audit is working remotely.
• A fresh look at who CAEs are reporting to administratively and functionally.

This year’s Pulse is an important resource that can “keep on giving” for leaders of North American internal audit departments. For those of you in the rest of the world, I still would recommend reviewing this report for insights on how internal audit functions in some of the world’s largest companies are navigating the volatile and disruptive era we are all living through.