I need to present a budget for our internal audit department to the CEO of our company. Our revenues are currently about $600 million and we have an Audit Manager, one Staff Auditor and two consultants in the Internal Audit Department.
I read a 2005 article in the CPA Journal that cited an IIA study that stated internal audit department budgets range from 0.03% to 0.2% of gross revenue.
Does anyone know what IIA study such data comes from and where I can find it? Possibly the 2004 or 2005 Global Internal Audit Report from the IIA? I looked on the IIA website and could not locate such a publication.
Also, what might be a reasonable budget in terms of revenue percentage for an Internal Audit department our size, especially considering we need to add one to two more auditors to complete the current expected work?
There have been several similar threads in the past and if you search the Discussion Area for "size", you will see various answers to this. In summary, it isn't as simple as a % figure and also depends on a number of other variables (e.g. degree of risk in the company & industry, degree of regulation, number of physical locations to be audited etc).
I agree with not actually getting caught up with a %. I would recommend thinking through what resources your dept needs. For example, what do you feel your dept needs for training in order to keep up to speed. I present the IA budget to the Board in that way. I provide them with examples of training seminars/conferences we plan to attend in the upcoming year, estimated cost per conference, add costs for local conferences and provide a total for that section. I then do that with each other budget area I'm responsible for: Memberships, Security Awareness initiatives, etc. Hope that helps!
Thanks for the tip on searching by "size" to find similar discussions on the boards. Obviously, how to plan, present and support a budget for an IAD is a hot topic, and there are quite a few variables to consider. Thanks for your help...