Risk management is a top priority for board members and executives, making it vital for internal auditors to increase their focus in this area, particularly the identification of potential future risks as well as risks tied to the business strategy, confirms a new study from Protiviti, a US-based business consulting and internal audit firm.
In its fifth year, Protiviti’s Internal Audit Capabilities and Needs Survey (www.protiviti.com/IAsurvey) assesses internal auditors’ skills and knowledge, along with competencies most in need of improvement.
“A strong internal audit function is critical to operating successfully and maintaining a state of effective internal control in a heightened regulatory and risk management environment,” said Bob Hirth, Protiviti executive vice president and head of global internal audit. “Our latest Internal Audit Capabilities and Needs Survey offers an honest look at the challenges – particularly those related to risk – that internal auditors face as they strive to meet new performance expectations.” To view a short video further exploring the survey’s findings, click here: www.protiviti.com/IAsurvey.
More than 600 participants from around the world – including chief audit executives, internal audit directors, and managers from publicly traded, private, government, educational and nonprofit organizations – participated in the 2011 Internal Audit Capabilities and Needs Survey. The survey asked participants to assess their skills and professional development priorities for more than 160 competencies in such areas as audit process knowledge; personal skills and capabilities; and risk management and governance process knowledge (a new category this year).
Key Findings of the 2011 Survey
According to the study, even as risk management consumes more of internal auditors’ time, these professionals still don’t feel prepared to meet the demands triggered by the spate of new regulation. Understanding “emerging risks” was ranked by survey respondents as the top “Need to Improve” item in the area of risk management and governance process, followed closely by “evaluating and changing risk appetite levels.”
Other key findings include:
1. International Financial Reporting Standards (IFRS) remain a concern for internal auditors. According to Hirth, the convergence of IFRS and U.S. GAAP will not be without its challenges. “Of particular concern to many is the fact that IFRS, as a principles-based approach, requires more discretion and judgment calls, as opposed to a rules-based concept such as U.S. GAAP where the lines are clearer around what can and cannot be done,” he said.
2. The prevention and detection of fraud once again emerged as a key concern of internal auditors, with related standards and guidance from The Institute of Internal Auditors ranking as top “Need to Improve” areas.
3. Building expertise in technology-enabled auditing, including continuous auditing and computer-assisted audit tools, also remains a top priority for internal audit professionals. According to Hirth, developing expertise and successfully implementing automated auditing tools and processes will enable internal auditors to focus on such higher-level initiatives as emerging risks – including new regulation, changes in the business model, changes in industry dynamics, and industry competition, among many other factors – and risks tied to the company’s strategy.
4. With regard to “soft” skills, internal auditors rate “dealing with confrontation” and “public speaking” as the areas in which they most would like to improve. These skills have ranked among the top areas for development for the past three years, a nod to the fact that internal auditors are assuming more strategic roles and working closely with most departments in their organisations.
The survey was conducted through in-person and online surveys. A complimentary copy of Protiviti’s 2011 Internal Audit Capabilities and Needs Survey is available at: www.protiviti.com/IAsurvey.
