State of the Internal Audit Profession 2012

Aligning Internal Audit
Are you on the right floor?

First there was the financial crisis. Then came the recession and regulatory reform, and disparate headlines: an oil spill in the Gulf of Mexico, a tsunami and radiation leak in Japan, heat waves and cold snaps, struggling economies, cruise ships running aground, financial firms going under, tainted food recalled,
hackers stealing personal information from millions, and on top of it all, continued uncertainty over the strength of the economic recovery.

Against this backdrop, it’s no surprise that of the 1,530 executives from 16 different industries and 64 countries who participated in PwC’s 2012 State of the Internal Audit Profession Survey, the majority say their businesses face more risks than ever before. With global trade, supply chains, and financial markets all intricately linked, risks become apparent quickly, unexpectedly, and with significant impacts on company operations, reputations, and even survival. All this has led companies to become more engaged than ever before in improving their ability to define, communicate, and manage their global risk profile.

This paper highlights rising stakeholders expectations and where they want internal audit to play in the risk management challenge, to deliver the greatest value. It also explores how leading internal audit functions have aligned themselves with these rising stakeholder expectations by expanding the footprint of risks they cover and clearly communicating deeper insights—“raising the floor” in a way that sets a new standard for internal audit functions across industries, geographies, and company sizes. Stakeholders and CAEs alike have recognised that in order for internal audit to be effective in supporting organisational risk management efforts, the minimum standard of performance has to rise. In today’s ever-shifting risk landscape, internal audit can’t settle for simply reacting to events; instead, it must adopt a strategic mindset that is responsive to risks and helps ready their organisations for new threats and opportunities.

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