Internal Audit Solutions for Tough Times

Greetings from San Diego, where The IIA’s aptly titled conference, “Internal Audit Solutions for Tough Times,” is wrapping up. It has been a great event with some very thought-provoking discussions on how the global economic crisis is impacting our profession. In a pre-conference survey of U.S. internal audit practitioners, we learned:

  • 74 percent of internal audit functions experienced flat or declining budgets in 2009.
  • Almost one-third experienced outright reductions over the past 12 months.
  • The outlook for 2010 does not look much better with 80 percent anticipating flat or declining budgets.
  • 57 percent have increased coverage of operational risks in the past year.
  • 49 percent have increased coverage of cost/expense reduction or containment for their companies.
  • 51 percent have increased coverage of company exposure to third parties in financial distress.
  • In 2010, respondents expect to dramatically increase coverage of operational risks, financial risks, compliance risks, and the overall effectiveness of risk management.

With their operating environments evolving rapidly, internal auditors face a number of key challenges in 2010. In a keynote address on August 25, I outlined the 10 most significant challenges that I think internal auditors will face during the coming year:

  1. Aligning internal audit coverage to meet new expectations.
  2. Realigning skills to address new requirements.
  3. Addressing internal auditing’s role in assessing risk management.
  4. Leveraging technology to achieve greater efficiencies.
  5. Coping with diminished resources.
  6. Demonstrating value and adding to the bottom line.
  7. Maintaining stature with the audit committee.
  8. Developing a continuous focus on risks.
  9. Maintaining a focus to prevent and detect fraud.
  10. Implementing the new International Professional Practices Framework.

I have commented on some of these challenges in my blog during recent weeks. In the coming weeks, I hope to address others.  

Finally, I thought the most thought-provoking quote of the week came in a keynote presentation by Larry Harrington, chief audit executive of Raytheon. Larry concluded his presentation (“Will We Lead or Become Irrelevant?”) by quoting Peter Drucker: “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

Posted on Aug 26, 2009 by Richard Chambers

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