Internal Audit Professionals in Demand, Playing Greater Role in Governance, Risk and Compliance
Amid increased scrutiny and regulation, the internal audit profession has grown dramatically in the last several years. The Institute of Internal Auditors (IIA) reports that membership in the organization, which spans 165 countries, has increased a staggering 58% over the past four years to more than 150,000 professionals. According to the IIA, studies have also shown that the surging demand for internal auditors has driven salaries up as much as 18% in just two years.
The scope of responsibilities and strategic importance of internal audit departments are expanding as well. Audit professionals are increasingly expected to move beyond compliance and financial reporting responsibilities to focus on business and operational risk as the credit crunch shows no sign of letting up according to the yearly annual Audit Committee Member Survey conducted by KPMG’s Audit Committee Institute (ACI). Oversight of information technology (IT) risk, in particular, has emerged as a high priority. Amid the change, internal audit has become a “valuable rung on the leadership ladder,” according to CFO.com.
Now, as firms step up to meet these challenges, executive search firm, A.E. Feldman, says auditor jobs exist for candidates who can evaluate and participate in the improvement of clients’ risk management, controls and governance processes through the use of strategic and technical expertise.
IA in the Spotlight
In the wake of the corporate scandals that erupted over the past decade, internal audit has found itself in the corporate spotlight, reports CFO.com. That’s thanks in part to Sarbanes-Oxley and its heightened financial-reporting mandates. The report states that today internal audit executives are immersed in all aspects of a business, and have frequent exposure to the board. That said, the report also contends that Chief Auditors are now considered senior finance executives and professionals who move into the lead audit role may be in a position to gain the experience and exposure to help shape the remainder of their careers.
CFO.com quotes Michael Fung, CFO of Wal-Mart’s North American stores division (who spent four years in internal audit) as saying that the exposure proved just what he needed to graduate to a chief finance role. “You have a chance to really learn and help improve the business. You build relationships with the board and the major business leaders. You can move internal audit to more value-added processes. And it builds your ability to manage people and work with cross-functional teams,” says Fung.
Raising the Bar
An increasing number of companies are expecting their IA teams to deliver more in terms of value creation from their risk and control based activity, not just value preservation, according to KPMG International. Mike Nolan, Partner in the KPMG International’s Advisory practice and Global Head of Internal Audit Services, says, “Audit committees increasingly look to IA to help them expand their oversight of organizational risks, governance, financial reporting and control frameworks.” Nolan adds now is the time to be ramping up IA efforts with more sophisticated capability in this area. “Having the capability to deal with today’s business risks requires a significant level of investment in skilled resources, methods, training, career paths and technical infrastructure,” he says.
The mindset of internal auditors must shift if they expect to remain key players in managing risk and providing assurance to senior management and the board of directors. That’s according to a survey conducted by PricewaterhouseCoopers (PwC) which projects the trends likely to shape the world of internal audit by the year 2012.
The PwC survey reveals that as organizations consider new techniques to manage risks and controls, they will look to both internal audit and other functional areas to assess risk as well as to perform the more traditional assessments of controls. The survey also suggests that the continuing migration toward a more risk-centric approach to internal audit is driven by globalization, changing internal audit roles, changes in risk management, talent and organization issues…and technological advancement.
Emphasis on Technology
Nearly two-thirds of the PwC survey respondents expect the number of internal audit professionals to increase over the next five years, with the largest increase occurring in the technology area. In fact, every single respondent predicts that their use of technology will increase over the next five years, and a whopping 95% expect technology to have a significant impact on internal audit responsibilities.
“Now, more than ever, the internal audit profession requires innovative thinkers who are ready to meet a wide range of GRC [governance, risk management, and compliance] challenges, explore new technologies, identify and help to mitigate emerging risks, and develop creative solutions to today’s complex business challenges,” said Bob Hirth, Protiviti Executive Vice President of Global Internal Audit Solutions.
