Internal Audit Takes New Direction

The focus of internal audit activities is expected to change significantly in the next five years, according to a new study.

The Institute of Internal Auditors has released the initial findings from a recent global survey it conducted in more than 107 countries.

“It’s important for any profession to understand where it’s been, where it is today, and where it’s going,” said IIA Research Foundation vice president Bonnie Ulmer in a statement. “This ongoing effort allows the internal audit profession to stay relevant, vibrant and visionary.”

According to Characteristics of an Internal Audit Activity, the first report in the study’s five-part analysis, the major focus areas for internal auditing in the next five years will be corporate governance, enterprise risk management, strategic reviews, ethics audits, and migration to International Financial Reporting Standards. Auditors will place less emphasis on operational and compliance audits, auditing of financial risks, fraud investigations and evaluation of internal controls.

Other significant findings from the first report, which examines the demographics and other attributes of the global population of internal auditors, include:

• More than half of the internal audit organizations get their staff from transfers within the organization, followed by employment agencies and referrals from professional affiliations.
• Internal auditors are entering the profession at a younger age.

• There is a significant increase in the percentage of internal auditors obtaining graduate-level and doctoral degrees.
• Approximately 50 percent of the respondents’ organizations will recruit more staff during the next five years, with 42 percent indicating that they will maintain current staff levels.

A second research report based on the same study, Core Competencies for Today’s Internal Auditor, provides insights regarding core competencies for today’s internal auditors and the use and effectiveness of the IIA’s International Standards for the Professional Practice of Internal Auditing.

According to the study, the top competencies include communication skills, problem identification, solution skills, and keeping up to date with industry and regulatory changes and professional standards. Understanding the business ranked as the most important technical skill.

“In our dynamically changing environment, the profession of internal auditing must be carefully monitored and continuously analyzed to document its history, critically important insights, and key lessons learned for future generations of internal auditors,” said Ulmer. “Not only must we strive to secure a robust portrayal of the current state of the profession, but encourage practice-relevant research to inform and push the boundaries of internal audit practice.”

The first two research reports are available to IIA members as free downloads and may be purchased by nonmembers for $25 each. Three additional reports will be released in the coming months:

•    Measuring Internal Auditing’s Value.
•    What’s Next for Internal Auditing?
•    Imperatives for Change: The IIA’s Global Internal Audit Survey in Action.

The full results of the entire study will be unveiled during the IIA’s General Audit Management Conference on March 14–15 in Las Vegas.