Internal Audit Departments Seeking New Balance

For two years, Sarbanes-Oxley (SOX) has been the central, and some would say only, focus of internal audit departments at public companies throughout the U.S.. A new survey by Protiviti Inc. shows that focus may be shifting as three out of four participating companies see the need or are already taking steps to balance SOX compliance with other risk management priorities. As a result, 62 percent of respondents plan to bring in additional internal audit resources.

“While Sarbanes-Oxley compliance understandably has been the top priority for most public companies, internal audit departments have a critical long-term responsibility to ensure effectiveness of risk management processes and practices within their organizations,” Bob Hirth, managing director for Protiviti and head of the company’s internal audit practice said in a prepared statement. “As the results of our survey indicate, companies are recognizing this and are ‘rebalancing’ priorities within their internal audit functions to address broader risk management activities along with ongoing SOX compliance in Year Two and beyond.”

Among the key findings of the survey are:

  • 74 percent of respondents reported rebalancing efforts are either being planned or are underway at their organizations.

  • 24 percent of respondents indicated that less than 20 percent of their internal audit department’s time will focus on SOX compliance after 2006.

  • 62 percent of responding companies plan to add additional resources to rebalance their internal audit functions.

  • 65 percent of companies who expect to add resources report their internal audit budgets will increase and 70 percent of these expect increases of 10 percent or more.

  • 38 percent of companies will increase their use of outside resources including 32 percent of those who do not currently co-source their internal audit functions.

  • 46 percent said internal audit departments will continue to have “lead responsibility” in SOX compliance, however 25 percent anticipate less involvement in developing documentation.

  • 50 percent of respondents indicated audit committees will have either moderate or significant involvement in the company’s rebalancing efforts.

  • Nearly 30 percent of respondents believe rebalancing will result in a more appropriate coverage of risk.

  • 18 percent expect to reduce costs of Section 404 and 302 compliance by rebalancing and 18 percent expect rebalancing to allow internal audit to perform more traditional audits.

  • 81 percent of respondents believe they will benefit moderately or significantly as a result of rebalancing.

The Internal Audit Rebalancing Survey was conducted between July 1 and August 15 at the Institute of Internal Auditors’ 2005 International Conference. The 27-question poll was designed to assess how companies are approaching the process of “rebalancing” internal audit department functions after First Year SOX compliance projects as well as the past and future roles of internal audit departments in regulatory compliance efforts. Members of KnowledgeLeader, a subscription-based internal audit and risk management portal were invited to participate. Numerous financial and audit executives nationwide who expressed an interest in providing their perspectives on the topic of rebalancing internal audit priorities were also surveyed. Two-thirds of respondents had the title and responsibility of chief audit executive, internal audit director or general auditor. Combined with respondents having the title internal audit manager or above, 91 percent of individuals participating in the survey held managerial positions.

Protiviti is a leading international provider of internal audit and business and technology risk consulting services. A comprehensive report on the survey results, titled “Moving Internal Audit Back into Balance” is available from www.protiviti.com or by calling 888-556-7420.

You may like these other stories...

As the volume of account reconciliations continues to surge, most corporate accounting and finance departments in the United States and Canada are still using a labor-intensive process to make sure their accounts’...
The average starting salary for students graduating this year with a business major – including accounting – has declined slightly over the last year, according to the latest salary survey from the National...
No matter how much we may want to put them on hold, we all have projects at work we need to start, right? Well, according to a recent survey of human resources (HR) managers by Accountemps, the most productive day of the...

Already a member? log in here.

Upcoming CPE Webinars

Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 26
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.