Internal Audit Departments Staff Up as Focus Shifts Toward Value Creation
The recession is creating a slew of challenges for internal audit (IA) departments. In fact, the 2009 PricewaterhouseCoopers State of the Internal Audit Profession study concludes IA professionals are being forced to grapple with a number of significant issues. Moreover, the report contends that with company revenue growth declining and expenses subject to greater scrutiny by management and stakeholders, internal audit leaders are now forced to reexamine strategy, optimize internal processes and pay special attention to the value that their departments deliver.
Meanwhile, in spite of current market conditions, PwC argues there remains a shortage of qualified professionals in the marketplace, resulting in a fierce competition for talent. Specifically, accountants with expertise in enterprise resource planning (ERP) and risk analytics will find themselves in heavy demand. The American Institute of Certified Public Accountants (AICPA) echoes this view stating that hiring qualified professionals remains the most critical concern for U.S. firms. Executive search firm, A. E. Feldman, also reports that accounting and finance executives continue to be confronted by the increasing complexities of changing tax laws and regulations, including the push for International Financial Reporting Standards (IFRS). The firm says that audit jobs are opening up as firms address mounting resource demands. Among the professionals in growing demand are Internal Audit Managers, Compliance Managers and senior-level professionals with expertise in the preparation and maintenance of financial, accounting and statistical reports.
IA Role Expanding
Internal auditors have been enjoying a surge in demand for their services. The IA role has expanded beyond internal controls assessment to achieve strategic and operational windfalls. This is especially true given the current recession. “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,” says Dennis Bartolucci, Internal Audit Services Partner with PwC.
Corporate management is asking internal audit to find new ways to help achieve strategic objectives, according to KPMG’s Audit Committee Institute. The firm says internal auditors are expected to extend their role and use quantitative skills and risk knowledge to help improve risk management and processes, and reduce complexity and costs. KPMG adds that companies are struggling to find qualified internal audit talent, as audit departments cope with greater responsibilities.
In keeping with this expanding role, internal auditors must also hone a specialized, more complex skill set. The Evolving Role of the Internal Auditor — Value Creation and Preservation from an Internal Audit Perspective, a KPMG white paper, states the experience and skills that are often required for internal audit professionals include risk management, continuous auditing, fraud detection and prevention, information technology, foreign language, and strategic operational knowledge in areas such as supply chain, shared services and outsourcing.
IA Leaders to Reexamine Strategy
Now is not the time to be out of step with company and management priorities, according to the industry leaders surveyed by PwC. According to the research, “With cost efficiency the name of the game, internal audit leaders will want to reexamine strategy, optimize internal processes, and find ways to produce more value at a lower cost.” Among the key trends in the report:
- Internal audit is faced with new challenges
- Company risk profiles aren’t what they used to be
- Internal audit must get up to speed in ERP systems and data analytics
- Internal audit faces performance measurement and customer-centric feedback
If internal audit is to demonstrate value in the face of declining resources, it must begin with a fresh look at the company’s internal audit strategy and a reassessment of its own processes, states PwC. The firm notes that doing so will help internal audit preserve its capacity to address strategic, operational, and business risks, as well as today’s emerging challenges.
The nature of business risk has changed, particularly for global organizations, according to PwC. As a result, emerging risks are growing, more difficult to predict, and now reverberating across entire industries and economies. Thus, aligning internal audit’s focus to the risks flowing from changing business priorities and conditions has become the central mission of forward-thinking internal audit executives.
And when it comes to recruiting, internal audit may find the talent hunt easier when it can present itself as an innovative, strategically aligned organization with a seat at its company’s risk management table, adds PwC.
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 discuss your firm’s talent needs, contact A.E. Feldman’s President, Mitch Feldman, now. Find out more about accounting jobs today!
