Optimism in North America for internal audit budget and staffing is at the highest levels since 2008, according to a survey by the Institute of Internal Auditors (IIA).
Internal audit is undergoing a change not only in duties such as increased compliance requirements but also in role – for instance, as a contributor to strategic initiatives. Companies are taking steps to make sure internal audit has the necessary staff and resources to take on the expanded role.
The percentage of respondents reporting budget and staff numbers increasing or remaining stable is the highest in the history of the IIA survey, which began in 2008. The number of respondents reporting additions to internal audit staff has increased each of the past three years.
Eighty-nine per cent of respondents said internal audit’s budget remained the same (52%) or increased (37%) in the past year. That’s up from 83% in 2012, 81% in 2011 and 72% in 2010.
Staffing increased at 23% of respondents, up from 21% last year and a low of 17% in 2010. Seventy per cent said staffing levels remained the same, matching the previous survey high set in 2008.
Thirty-six per cent of companies predict internal audit budgets to increase, compared with 10% predicting a decrease in the next 12 months. Among Fortune 500 respondents, the numbers were similar: 37% predicted an increase, and 10% predicted a decrease.
In staffing projections, Fortune 500 companies were more likely to say they would add staff: 32%, compared with 25% for all respondents. However, 9% of Fortune 500 companies predicted a decrease in internal audit staff, compared with 4% of all respondents.
Composition of expected audit plan coverage in 2014 is broken down into the following categories:
- Operational (27%)
- Compliance/regulatory (15%)
- Financial (11%)
- Sarbanes-Oxley testing/support (11%)
- Information technology (11%)
- Risk-management effectiveness (6%)
- Strategic business risks (4%)
- Fraud (4%)
- Corporate governance (3%)
- Other (8%)
Strategic business risks, despite being low in priority, remain a top risk, according to the IIA. The survey shows that 53% of respondents rank strategic business risks among the top five priorities for their audit committee, and 71% say it is a top priority for executive management.
“The limited coverage on strategic business risks appears misaligned with respondents’ assessment of the importance of this area to stakeholders,” the survey said.
Related CGMA Magazine content:
“Five Key Objectives for In-Demand Internal Auditors”: The perception of internal audit as a function that can add value in addition to enforcing compliance is placing importance on several objectives for internal auditors.
“New Duties on Horizon for Internal Auditors”: Strategic duties will become an increased focus for internal auditors over the next two years, according to a global EY study.
—Neil Amato (firstname.lastname@example.org) is a CGMA Magazine senior editor.