Escalating the role of internal audit
Internal auditors face new opportunities and a growing skills gap as management increasingly looks to them for business improvement recommendations and coverage of a broader range of strategic and operational risks. “Escalating the role of internal audit: EY’s 2008 Global Internal Audit Survey” examines the current and evolving state of the internal audit function and how chief audit executives are meeting the heightened expectations of stakeholders.
According to the survey, difficult economic conditions and heightened shareholder expectations have put pressure on executive management and audit committees to improve risk management and deliver greater value. As a result, internal audit’s role is clearly evolving and becoming more consultative. Regulatory compliance continues to be important, but management now expects performance improvement recommendations and insights into emerging risks, in addition to coverage of a much broader range of risks.
The survey of 348 internal audit executives in 24 countries shows a need for greater focus on operational risks over next two years, with 75% of respondents citing focus on IT, 61% on mergers and acquisitions, 53% on major capital programs, 45% on performance improvement, 44% on information security, and 39% on fraud. Yet, only 69% of respondents are at or above 90% of budgeted headcount with 64% indicating that recruiting and retaining subject matter specialists in these areas is a challenge.
The survey also suggests that Internal audit’s traditional competencies don’t fully meet the needs of today’s organizations. This lack of resources with relevant experience and knowledge hinders the ability to conduct an effective risk assessment. Only 17% of respondents rated their risk assessment performance as very competent.