How the Role and Skills of a Chief Audit Executive Are Evolving
The traditional role of chief audit executives (CAEs) as watchdogs is expanding to include them as business partners or consultants. Their hard-edged technological, risk management, and compliance skills now must blend with softer people skills.
“While education, experience, and certification are important, they alone are not sufficient to propel someone to the CAE ranks. Personal skills and attributes are also evaluated by organizations seeking to appoint a CAE,” the Institute of Internal Auditors (IIA) Foundation said in a new report, CAE Career Paths: Characteristics and Competencies of Today’s Internal Audit Leaders.
The report – based on a survey of 14,518 professionals in 166 countries – sheds some light on the key skills CAEs should have as they take on new responsibilities.
“The CAE must plan, organize, staff, direct, and control the internal audit function. Some CAEs are called on to expand their oversight beyond internal audit and assume primary or shared responsibility for the organization’s risk management and compliance activities,” the report states, citing findings from three earlier studies. “In addition to performing the required tasks, the CAE is expected to model desired behaviors – to project the tone at the top that shapes a value-adding culture. Internal audit’s success depends on the direction provided by its CAE and the organization’s management team. Therefore, finding a CAE with the requisite characteristics is critical for all organizations.”
First, a quick snapshot of who CAEs are these days:
- Sixty-nine percent are 40 to 59 years old.
- Almost all (94 percent) hold a bachelor’s degree, and most (64 percent) majored in accounting. In North America, 80 percent of CAEs hold a bachelor’s in accounting.
- Internal audit experience overall totals 13.4 years (6.8 years as a CAE, 2.1 as a director, 1.6 as a manager, and 2.9 as a staffer). North American respondents reported the highest overall experience at 18 years; the lowest was 10 in East Asia and the Pacific.
- Most CAEs (68 percent) hold the Certified Internal Auditor designation.
In 2010, IIA President and CEO Richard Chambers offered a broader look at the makings of a successful CAE: superior business acumen, dynamic communication skills, unflinching integrity and ethics, breadth of experience, excellent grasp of business risks, a gift for developing talent, and unwavering courage. A year later, he and the Korn Ferry Institute added relationship acumen – the ability to build and keep strong relationships with stakeholders.
Interviews with several CAEs for the report spotlighted these key skills:
- Having a deep knowledge of the business and the ability to evaluate risks.
- Leading by example.
- Taking a holistic view of the organization and visualizing internal audit’s role.
- Identifying strategic issues through critical thinking.
- Gaining knowledge of the entire organization.
- Adopting an executive approach: Acting and communicating like the C-suite does.
- Having excellent communication skills that can link top management and internal audit.
“There is no single career path guaranteed to becoming a CAE or functioning successfully once in the position. The requirements for success vary across regions and organization types and sizes,” the report concludes. “Nevertheless, some basic qualifications seem to prevail. Relevant education, experience, and professional credentials in internal audit are important, but these alone do not necessarily qualify someone to be a CAE. Organizations also look for personal characteristics, such as the ability to establish and maintain strong connections with key stakeholders, and soft skills, such as strong leadership ability, critical thinking, and an ability to communicate effectively.”
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Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.