Role Of Internal Auditors Growing In Strategy, Risk
Internal auditors face increasing pressure to contribute to company strategy and performance and also to play a larger role in risk assessment, according to Ernst & Young’s 2007 Global Internal Audit Survey.
The survey reveals that “Internal Audit is in the middle of an evolutionary transition, facing great challenges, as well as new opportunities. There is a call for Internal Audit to do more to meet the needs of its stakeholders.”
The key findings are:
- Stakeholder expectations are increasing with greater focus on enterprise-wide risk assessment and business and operational risk.
- In implementing enterprise-wide risk assessments, as well as covering of key risk areas, there is an opportunity for Internal Audit to improve coordination with other risk management groups within the company.
- People are still the foremost challenge for Internal Audit functions around the globe: recruiting, retooling, developing, and retaining the right skills.
- Industry, IT, fraud, and business and operational risk are the specialized skills most difficult to recruit and retain. These are also among the areas which respondents indicated pose greater risks to their companies.
- There is an opportunity for Internal Audit to better leverage technology and knowledge collection/sharing tools to improve effectiveness and efficiency significantly.
- Internal Audit functions around the world have the opportunity to expand their impact on – and improve their companies’ performance in – enterprise-wide risk, particularly in areas such as fraud, major capital programs (including IT), contracts, transactions and international expansion.
- The potential for increasing Internal Audit’s strategic relevance is great. Our survey shows that Internal Audit’s expanded role in these areas is not only an objective, but is also expected.
Complicating matters are Internal Audit’s efforts to reconcile the sometimes-divergent objectives of the Audit Committee and executive management. While the Audit Committee is interested in keeping the company out of trouble, executive management is also interested in Internal Audit’s point of view on improving business performance.
Stakeholders, including the Board of Directors, the Audit Committee, employees, regulators and stockholders are watching to see how Internal Audit functions will respond. In order to meet these expectations, and to become more strategically relevant, Internal Audit leaders need to continue to think differently and react quickly, E&Y says.
The 2007 Global Internal Audit Survey can be downloaded at no charge from E&Y’s website.
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