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Wednesday, February 20, 2013 - 15:41
Survey results for 2010

“Internal auditing is on the brink of change as the profession shifts in line with the demands of a rapidly-changing business environment,” says George Williams, BDO’s South Africa Risk Advisory Services Director.

In referring to the Institute of Internal Auditors (IIA) Global Internal Audit Survey 2010, he says today's businesses are demanding increased return on investment, and that applies equally to stakeholders and audit committees. Delivering on those expectations means listening to relevant stakeholders and understanding their needs and requirements.
The survey is the most comprehensive one that the profession has taken. It was conducted in 22 languages involving more than 13 500 practitioners in 107 countries. It looked at, and considered, the current perspectives and opinions of internal audit practitioners, as well as the nature and scope of internal audit assurance and consulting.
According to the IIA's website, five reports were released, culminating in a comprehensive study providing perspectives on global internal audit practices, trends and insights. It will evolve into a practical resource for internal audit strategic planning and decision-making, and the survey will be repeated every five years to assist the profession in staying relevant and vibrant.
Williams says the survey will benefit the internal auditor profession by driving positive change and improvements; examining current professional trends; delivering greater value and strategically positioning the profession for the long-term. The professional landscape to 2015 will strive to adapt to changes in stakeholder expectations based on the responses garnered from the survey. Organisations in lesser developed countries expect to catch-up to those in their more developed counterparts; privately-held firms will catch-up to listed entities and smaller companies will catch-up to larger organisations.
“With the business and economic environment continuously changing, company demands are stretching the resources and capabilities of internal audit departments. As they grapple with new organisational strategies, risk management and governance initiatives, some find it more and more difficult to balance the needs of the audit committee with the day-to-day audit work. As a result, it is critical that the internal audit department adapts to changes in stakeholder expectations.”
Encouraging findings arising from the survey are that 79% of all respondents surveyed said their organisation currently complied with code that dealt with corporate governance, and that 82% said their own organisation had already implemented an internal control framework. When considering the expected evolution of the role of the internal audit function, Williams says that the role of the internal audit activity in risk management and governance will continue to increase to become accepted from the perspective of internal audit practitioners as the two most important cornerstones of the profession.
Over the next five years, survey respondents expect increases in the role of internal audit activity in training audit committee members, performing an advisory role in organisational strategy development and an education role for organisational personnel. “What is encouraging from the survey is that the respondents from Africa are very bullish about the future prospects for internal audit when compared to their international peers: 80% (compared to 63% overall) see internal auditors playing a key advisory role in organisation strategy development within the next five years: and, 77% (compared to 58% overall) expect that internal audit activity will have provided training to audit committee members over the same period,” says Williams.
The profession should anticipate growth in the following seven key activities: corporate governance reviews; audits of enterprise risk management processes; reviews addressing linkages of strategic and company performance; ethics audits; social and sustainability audits; migration to International Financial Reporting Standards (IFRS;) and, disaster recovery testing and support.
“Another potential issue facing the profession is ever-changing technology. Most internal auditors realise that they could – and should - better use the power of the computer, but they don’t,” he says. “Instead, they prefer to continue auditing through manual methods.” This is borne out by the survey’s findings, with 63% stating that they would look to employ computer-assisted audit techniques, 55% implementing electronic working papers, 54% implementing a continuous/real-time audit process and 52% looking to focus on data mining over the next five years.
“With the power of data analytics and continual audit methodologies, the cost and time spent on performing audits could be reduced greatly. This would enable the internal auditor to spend more time with management and other stakeholders to establish their real needs, thereby adding value to the organisation’s bottom line.
“As far as future skills set required to make this a reality, the profession and its practitioners will be required to boost their business insight, an element currently lacking, as well as in written and oral communication skills and information technology abilities,” he adds.

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Copyright © Insurance Times and Investments® Vol:26.1 1st January, 2013
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