Internal audit staff are optimistic they will start to see a loosening up of resources in 2013, according to the latest data from the Institute of Internal Auditors.
The IIA's annual “Pulse of the Profession” survey of 545 internal auditors in North America reveals 41 percent of internal auditors expect budget increases in 2013, the highest percentage since 2008, and 50 percent said they expected budgets to remain stable next year. Only 9 percent expect their budgets to fall, the lowest number since 2008. About one-fourth of respondents said they expect staff levels to increase in 2013, and 71 percent expect staffing to remain steady.
The expectations are comparable even among auditors with Fortune 500 companies that participated in the study, said the IIA -- 38 percent expect budget increases in 2013 and 29 percent expect to add more internal audit staff. “These are the strongest results we've seen in many years,” says Richard Chambers, IIA president and CEO. “It's a reflection of the value that audit committees and management are placing in having a strong, well-resourced internal audit function.”
In terms of audit coverage, the survey suggests internal audit shops might still lag in 2013 in two key areas: risk management effectiveness and strategic or business risks. According to the results, only 4 percent of the coming year's total audit coverage will focus on strategic or business risks, and coverage for risk management effectiveness is similar. The IIA is advising companies to rethink those concentrations in light of current market conditions. Chambers says this year's results represent the first time since the IIA began the survey that financial focus has actually declined somewhat, suggesting internal audit is maturing past internal controls auditing and providing more coverage for other types of risks.
The survey also suggests that widespread concern over new incentives for whistleblowers to bypass internal processes and go straight to outside authorities have not played out as many companies feared. Survey respondents said the number of hotline tips their companies manage has not changed significantly since the Securities and Exchange Commission began offering new rewards for whistleblowers under Dodd-Frank. Only 2 percent of respondents said they were highly concerned about whistleblowers bypassing internal processes while 78 percent said they had little or no concern.