Internal audit staffs and budgets rise

Internal auditors are taking on more responsibilities, leveraging generative AI for tasks such as audit planning and reporting, and seeing their staff and budget grow to nearly the level they were at prior to the pandemic, according to a new report.

The annual survey, released Monday by the Institute of Internal Auditors' Internal Audit Foundation in partnership with AuditBoard during an IIA conference in Orlando, found the scope of internal audit responsibilities is expanding. A growing percentage of the 378 chief audit executives surveyed have responsibility for enterprise risk management at their organizations, nearly one-third last year, compared to only 24% nine years earlier. Other common areas of responsibility include fraud (47%), Sarbanes-Oxley (36%), and ethics and whistleblower programs (33%). CAEs want to perform more advisory services in the future than they currently do. 

The percentage of chief audit executives reporting the use of gen AI for internal audit activities has more than doubled in the past year, growing from 15% in 2023 to 40% in 2024. There are significant differences in terms of generation, with millennial CAEs most active (52%), followed by Generation X (40%), and baby boomers (31%). 

The trend for internal audit budget and staff growth has stabilized to nearly pre-COVID levels.  Last year, 34% of CAEs had a budget increase, and 25% had a staff increase. Nearly 70% of CAEs had to recruit to fill a new position or a vacant position last year. Even among smaller internal audit functions (with between four to nine full-time employees), recruiting was necessary for nearly half of the CAEs surveyed. 

Nevertheless, insufficient funding impacted about half of the survey respondents.  About half of the survey respondents said their funding is somewhat sufficient or insufficient, with the biggest impact in the public sector. 

Where internal audit functions were more aligned to organizational strategy, higher levels of funding were in place. Overall, just over half of CAEs said internal audit was fully or almost fully aligned with their organization's strategy. 

"Internal audit executives understand that closely aligning their activities with organizational goals allows them to play a more strategic role," said IIA president and CEO Anthony Pugliese in a statement. "Technology is the path of the future, with internal auditors integrating more tools to increase efficiency and effectiveness. This enables the profession to take on a broader role, meeting the demands of an evolving business environment and affirming our increasing importance and relevance."

Remote work is slightly decreasing for internal auditors. The latest trend shows a small increase toward more in-person work since last year (rising 4 percentage points). Along with this shift, there's nearly an equal mix between mainly working in person and primarily remote (both 32%). The remaining 36% of internal audit functions split their time roughly equally between remote and in-person work.