Internal Audit to Deliver Greater Strategic Value, Salaries on the Rise
The time has come for companies to reexamine internal audit (IA) - an underutilized resource whose efforts for years have been focused on a small part of the overall risk picture. That’s according to a recent report from PricewaterhouseCoopers LLP (PwC). The research suggests that what is needed now is an internal audit function that not only lowers operating costs…but also delivers greater strategic value. “As credit markets tighten, commodity prices increase, and businesses hunker down to ride out the softening economy, no resource can go overlooked — especially an internal audit function that has this much potential to help companies protect shareholder value,” said Jim LaTorre, PwC’s Managing Partner U.S. Internal Audit Services. “The time for change is now.”
Accounting firms are in growing demand to assist companies navigating the challenges and opportunities that the current financial environment creates. Accounting and finance executives also continue to be confronted by the increasing complexities of changing tax laws and regulations, including the push for International Financial Reporting Standards (IFRS). Amid the trend, hiring qualified professionals remains the most critical concern for U.S. firms, according to the AICPA. Executive search firm, A. E. Feldman, reports that recruiting among accounting firms remains highly competitive. The firm says that accounting jobs are opening up as firms address mounting resource demands. Among the professionals in growing demand are Audit Managers and senior-level professionals with expertise in the preparation and maintenance of financial, accounting and statistical reports.
Internal Audit to Deliver Strategic Value
In a recent report, PwC argues that the internal audit department has the most potential to help companies manage risk. The report adds however that in order to do so, internal auditors must transition from a financial-controls-centric mindset to a shareholder-value-centric mode of thinking.
According to PwC, for internal audit to successfully help organizations evaluate the risks that impact shareholder value, the function must undergo both a value and cost transformation. The firm suggests internal audit must do more of the higher-value work that comes from a focus on risks, while also lowering operational costs by driving radical levels of efficiency into its traditional work.
“As management’s search for cost reduction becomes more inclusive and stakeholders demand improved risk management, internal audit needs to examine its role in the organization, retool its teams, and prepare for a new level of involvement in governance and risk as well as compliance,” says LaTorre.
Dennis Bartolucci, Internal Audit Services Partner with PwC, adds that “In order to succeed, the traditional internal audit function will have to prepare for a whole new battlefield. In uncertain economic times, organizations pay close attention to every cost element — certainly anything that has an expense budget attached to it. In other words, there is no more free pass for internal audit.”
The PwC report concludes that internal audit must improve on its value-to-cost ratio and that the right way to do so is by adding value while simultaneously reducing cost. The report notes however, that changing the value side of the value/cost equation involves developing a new focus on risk — what it means to the enterprise, how it promotes or reduces shareholder value, and what internal audit can do about it.
“The profession is being revolutionized,” says LaTorre. “A compliance-based approach is something of the past. This isn’t about incremental change. It’s about transformation.”
IA Salaries on the Rise
Internal auditors in the United States and Canada appear to be holding their own during these challenging economic times, according to an October compensation study released by The Institute of Internal Auditors (IIA). The study, which polled more than 1,200 companies, finds that internal auditors with the Certified Internal Auditor (CIA) designation are cashing in earning significantly more than their counterparts without an internal audit certification.
Looking ahead, the study also concludes that internal auditors on average will continue to receive raises over the next year, despite the looming recession. The study found that a staggering 91% of employers surveyed indicated they are likely to increase internal auditor salaries next year. In fact, a full 69% are planning to provide increases to 100% of their audit staff in the next 12 months, versus 34% for their entire workforce.
Are you working in internal audit? If you want to grow your career or your company’s bottom line, contact A.E. Feldman’s President, Mitch Feldman, now. Find out more about accounting jobs today!
