Study examines the top indicators that internal audit is functioning at a high level
A new research report from The Institute of Internal Auditors Research Foundation finds a wide variety of factors influence the maturity levels of internal audit functions around the world. The age and size of the internal audit function, industry type, organizational size, and other variables often influence how quickly internal audit functions can operate to deliver a high level of value. The study also found a wide disparity in how well audit departments are aligned with the overall strategic objectives of the organization.
The report identified 11 indicators of maturity, then analyzed how internal audit functions stack up against those indicators in seven key areas, such as risk assessment and internal audit planning.
The report's authors used a combination of data from the Global Internal Audit Common Body of Knowledge (CBOK) practitioner survey and interviews with a number of chief audit executives to understand the causes in maturity variations among departments.
Among the most startling results of the study are that audit departments say they aren't all that well aligned with the strategic objectives of the company. Just 55 percent of respondents said they were either "fully aligned" or "almost fully aligned" with the company's strategic goals.
Audit shops faired much better on how they respond to and provide assurance over the risk-management function. A global average of 71 percent of the responding CAEs indicates that they use a "comprehensive" risk assessment. "The current complex business environment requires internal audit departments to adopt comprehensive risk assessment if they have not already done so. This is important so as to have a broad view of the risks that their organizations face," the report's authors wrote.
Regional variations ranged from minor, for instance, when it comes to alignment of the internal audit function with the organization's strategic plan, to more significant deviations, such as in the use of technology.
The technology findings, for example, reflect a wide regional variance in the number of CAEs reporting primary reliance on manual systems and processes, with a low of 13 percent in North America, to a high of 36 percent in the East Asia and Pacific region.
While further research is necessary, says the report, the interviewed CAEs noted higher maturity to be associated with:
• More support and respect for internal auditors and their authority
• Greater use of internal audit on sensitive business issues and strategically important projects
• A stronger voice for internal audit when reporting to stakeholders
The report, "Benchmarking Internal Audit Maturity, A High-Level Look at Audit Planning and Processes Worldwide," is the latest in a series based on the CBOK practitioner survey.