Things Are Looking Up for Internal Audit
Fraud Is Back (on Internal Audit’s Radar)
March 24, 2010Don’t Confuse Independence With Objectivity
May 3, 2010A few months ago, I noted in this blog that the worst seemed to be behind the internal audit profession. I based that assessment on some very early indicators that the impacts of the economic crisis were abating. Six months later, the indicators are stronger than ever that a recovery is underway.
One of our primary objectives at The IIA these days is to ensure we enhance our relevance for chief audit executives (CAEs) — particularly those in the corporate sector. In that regard, we have been routinely surveying the profession over the past year on a range of critical topics related to the impact of the economic crisis. The survey results from the first half of 2009 painted a grim picture of the toll the crisis was taking on internal audit budgets and staffing levels. As the year unfolded, however, the opportunities began to manifest themselves in further survey results. Internal auditors were diversifying their coverage and addressing a much broader portfolio of risks than had been the case in recent years.
We surveyed the profession in North America once again last month. This time, the results were not only encouraging in terms of continuing diversification of coverage, but also indicated that budget and staffing reductions are waning. For example, during 2009 almost 35 percent of Fortune 500 internal audit activities reduced their staffing levels. When asked about the outlook for 2010 in last month’s survey, only 11 percent projected decreases. On the flip side, almost 19 percent projected their staffing levels would increase this year. While no one should declare the crisis to be over — after all, almost 70 percent expected staffing would remain flat this year — the results are a vast improvement over last year.
Survey results are backed up with empirical evidence, as well. Last month, more than 700 attendees gathered at this year’s IIA General Audit Management (GAM) Conference in Orlando. Compare that number with only about 400 at last year’s event. Similar attendance patterns are shaping up for our upcoming Gaming Conference and at The IIA’s International Conference in Atlanta in June. Evidence is materializing on all fronts that the profession is alive and well, and internal audit professionals are out in force to gather and deploy leading practices to meet stakeholder expectations.
As with our other surveys conducted over the past year, The IIA’s new Audit Executive Center published a Knowledge Alert (PDF) (AEC member access only) to summarize the results of the most recent survey. The Knowledge Alert identified five high-level trends that the results reveal are unfolding in the profession:
- The role of internal audit activities and the CAE is continuing to proliferate in key organization wide initiatives.
- Internal audit budgets and staffing levels are beginning to stabilize after a difficult year in 2009.
- Staffing activities and issues are at the forefront of CAE administrative concerns in 2010.
- Risk management is the No. 1 strategic priority for CAEs and the key area of focus for internal audit activities in 2010.
- Enterprise risk management and International Financial Reporting Standards are at the forefront of CAE concerns beyond 2010.
I urge you to take a look at the Knowledge Alert, and leverage its insights when planning for the year ahead. Moreover, in the April issue of Internal Auditor (select Archive tab and April 2010 issue), I expand on my thoughts about where the internal audit profession is going in the coming years. In the meantime, we will continue to monitor events, and will keep you posted through timely thought leadership, as well as right here in this blog.
