IIA Survey: Internal Audit Executives Grappling with Talent Shortage
Internal audit functions in North America are facing increased competition to recruit and retain the top talent needed to meet the increased complexity in today’s regulatory environment, assess emerging cybersecurity risks, and put more effective risk-based assurance and advisory services into place. Because of that competition, some chief audit executives (CAEs) are concerned that landing top talent could be a tough task, according to a new report from the Institute of Internal Auditors (IIA).
The IIA released its North American Pulse of Internal Audit survey on March 9, in which 311 CAEs and other internal audit managers offered perspectives on the challenges the profession faces and insights on how to address those challenges.
One such challenge is the “war on talent,” the IIA stated. According to the survey, 40 percent of respondents indicated that attracting and retaining talent was a “high” or “critical” priority for their audit plans. But when survey respondents were asked to describe the reasons for any skills gaps on their audit teams, 54 percent cited competition for a limited pool of skilled auditors.
According to the IIA, this suggests that although a shortage of talent remains a concern for some in the profession, others may be confident they currently have the right talent to perform audits. Also, CAEs may not be expanding their audit coverage to encompass emerging risks requiring more talent with varied, more specialized skills and competencies.
“Business and government face significant challenges to keep pace with a dizzying array of rapidly emerging and evolving risks,” said IIA President and CEO Richard Chambers. “The internal audit profession is in an ideal position to help them, but we must have the right talent at our disposal to provide that assistance.”
Based on survey findings and perspectives from CAEs, the IIA attributed the growing talent shortage in the internal audit profession to the following two things:
1. Internal audit functions continue to seek talent with skills and competencies in traditional areas, such as accounting and finance, despite shifting expectations from audit committees to address critical risks outside of these areas.
2. The profession is suffering from a brand-identity crisis. On one hand, internal audit functions have difficulty attracting and recruiting top talent when up against the perceived opportunities in such fields as banking and consulting, where higher salaries are more appealing to today’s in-demand candidates looking to fast-track their careers. On the other hand, the internal audit function has difficulty retaining top talent given its reputation as a breeding ground and pass-through source of talent for the business, coupled with a lack of strong retention strategies.
The report also identified the top skill categories that are most in demand, as well as the areas where managers are experiencing difficulty hiring candidates and where the biggest skill deficiencies are.
The top three most in-demand skill categories are:
1. Analytical/critical thinking (62 percent of respondents consider them to be “extremely essential”; 34 percent consider them “very essential.”)
2. Communication skills (56 percent of respondents consider them to be “extremely essential”; 40 percent consider them “very essential.”)
3. Business acumen (30 percent of respondents consider it to be “extremely essential”; 50 percent consider it “very essential.”)
The top five areas where respondents are experiencing difficulty hiring candidates are:
2. Cybersecurity and privacy
3. Data mining and analytics
4. Industry-specific knowledge
5. Analytical/critical thinking
The top five areas where skills are lacking the most are:
1. Quality controls
2. Data mining and analytics
3. Cybersecurity and privacy
4. Forensics and investigations
Despite concerns about a shrinking talent pool, survey respondents projected increases in budgets and staffing in 2015. On the financial side, nearly 42 percent of CAEs and managers expected their budgets to increase, nearly 50 percent expected their budgets to stay the same, and only 9 percent anticipated a decrease in budget. Also, 29 percent of respondents anticipated an increase in their staffing levels, while 68 percent expected staffing levels to remain the same. Only 3 percent projected a decrease in staffing.