The latest research from Ernst & Young indicates internal audit is in the middle of an evolutionary transition where stakeholder expectations are increasing the pressure on firms to secure the right type of talent for more focus on enterprise-wide risk assessment and business and operational risk.
The majority of companies surveyed for the E&Y Global Internal Audit Survey had multiple risk management functions in addition to internal audit; half had formal enterprise risk management functions; but only 29% of respondents indicated internal audit had strong interaction and alignment with other risk management functions in the company.
Although internal audit is able to secure an adequate budget, it struggles to attract and retain ‘the right type of talent’. The survey found 49% of respondents had increased the size of their internal audit function over the preceding 12 months; 38% were operating at less than 90% of budgeted headcount; more than one in five internal audit functions had an annual staff turnover of more than 20%; and 36% reported an estimated annual staff turnover rate of more than 15%.
The top skills which are the most difficult for internal audit to recruit are IT auditing, industry experience and fraud prevention-detection. IT auditors represented only 10% of the internal audit headcount for more than half of respondents’ internal audit functions compared with leading internal audit functions which had 25% of their staff focused on IT activities. In addition, more than a third of respondents did not have staff trained in fraud prevention-detection. Other significant skill gaps in key risk areas include transactions, tax, major programs, and contract auditing.
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