Business: Internal audit professionals faced with doing more with less – according to new PwC survey

A difficult period sets the stage for internal audit transformation according to a new PricewaterhouseCoopers (PwC) US state of the internal audit profession study launched today. Not surprisingly, the economy is the top issue for the coming year according to PwC's fifth annual study of current issues for the internal audit profession. While the economy dominates, other issues such as declining budgets, alignment to emerging risks such as proper risk management and increased globalisation are also top of mind. Now is the time that internal audit leaders must be focused on the value and quality of service their departments deliver to their organisation.

Key findings from the study include:

  • Over a third (36%) expect budgets to decrease in the coming year with 49% expecting budgets to remain flat;
  • Only 13% of respondents indicated that their departments allocated at least 25% of resources to strategic and business risks, while the majority (57%) assigned this to more traditional financial risk.

Speaking at the study launch, Bob Semple, Partner, PricewaterhouseCoopers Ireland said:

“These survey findings are equally relevant in Ireland as Internal Audit leaders struggle to maintain services with reduced resources, at a time when risks have increased significantly. In the current very difficult operating environment, internal audit is even more critical in providing assurance about risks and controls.”

Commenting on the role Internal Audit has to play in relation to risk management, Semple added:

“Now more than ever before, a new approach to risk management is needed - one that is not afraid to challenge previous practices, one that insists on personal accountability at all levels in the organisation. In this new environment, Internal Audit will have a vital role to play in ensuring that management improves its treatment of risks in a tangible, pragmatic way. By raising the bar and helping to transform business, Internal Audit will bring increased value to the business and to its stakeholders.”

Shareholder value is being impacted by new and previously unanticipated risks. Internal audit now, more then ever before, faces the dual challenge of realigning its resources to address the reality of these new emerging risks while demonstrating knowledge of the business with its people who may be less experienced and potentially unprepared to identify and deal with the implications of those risks. Successful internal audit departments will be those that maintain alignment with the changing risk profile of their organisation and the evolving needs and expectations of their key stakeholders.

Bob Semple concluded:

“In order to meet service these evolving needs, we believe it is essential that internal audit leaders find effective ways to attract and retain top talent and increase business and operational knowledge. Faced with volatile risks and declining resources, internal audit leaders will be challenged in 2009 and beyond to embrace creative solutions for ensuring risk monitoring and mitigation while implementing cost-saving initiatives.”

ENDS

To download a full copy of the report, “Business upheaval: Internal audit weighs its role amid the recession and evolving enterprise risks: PricewaterhouseCoopers 2009 State of the internal audit profession study,” please visit www.pwc.com/internalaudit.

Methodology:

The 2009 State of the Profession survey for internal auditing was conducted in the fourth quarter of 2008 and includes responses from 700 internal auditors.

Of the respondents, 88 percent are either chief audit executives or internal audit directors/managers, and 69 percent are from companies with $1 billion or more in revenue.

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