IIA Annual Survey Reveals Organizations are Investing in Internal Audit to Meet New Challenges and Emerging Risks

LAKE MARY, Fla., March 14, 2022 /PRNewswire/ -- In an era where disruptive change has become the norm, The 2022 North American Pulse of Internal Audit: Benchmarks for Internal Audit Leaders reflects key barometers for measuring COVID-19's impact on the internal audit profession. In general, damage control in response to the pandemic's initial wave has subsided, with the percentage of functions cutting budgets and staff nearly returning to pre-pandemic levels. Key data points from the latest Pulse include:

• Organizations must prioritize internal audit investments in order to meet the growing demand for environmental, social and governance (ESG) assurance and address boards' and executive management's concerns about new and emerging risks.
• If Chief Audit Executives (CAEs) had access to more funding, nearly half say they would spend it on adding staff. The second most popular response is investing in technology, and of those who chose "technology," 68% say they would invest in data analytics software. The growing demand for data-driven analysis, alternative work from home models, and the need to provide assurance over nonfinancial disclosures demand prioritization of- and investment in technology.

"Pulse 2022 makes clear the importance of organizations investing in internal audit to meet today's challenges and emerging risks. This year's report also highlights the need for organizations to support technology and automation to allow internal audit functions to focus on tasks that add more human value, including analysis of emerging issues such as cybersecurity and ESG," said Anthony Pugliese, CIA, CPA, CGMA, CITP and president and CEO of the Institute of Internal Auditors. "These are exciting times for our profession – with good data in hand and appropriate resources, the modern independent internal auditor is well equipped to help the organization meet today's rapidly evolving challenges."

The IIA has gathered insight from profession leaders through the annual Pulse survey since 2009. Each survey collects information and perceptions from internal audit leadership, primarily CAEs and directors/senior managers of internal audit across the public, private, and nonprofit sectors.

Building on more than a decade of survey results, the 2022 report reveals important trends in four key areas:

Internal Audit Budgets: In 2020 and 2021, functions with budget increases were at their lowest levels since the start of the survey in 2008 (20% and 24%, respectively). In addition, 2021 had the largest percentage of functions where budgets stayed about the same since the survey began in 2008 (58%). On the positive side, the percentage reporting budget cuts has nearly returned to pre-pandemic levels (36% vs. 18%).

Internal Audit Staffing: COVID-19 has had a smaller impact on staffing than on budgets. The Global Financial Crisis of 2008-2009 provides a parallel benchmark to the current pandemic. For both, the impact on internal audit was less dramatic for staff levels than budgets. However, the appetite to increase staff has not rebounded from COVID-19 with the same rigor as it did for the Global Financial Crisis. This may indicate a lack of confidence/certainty about future organizational growth or challenges in identifying and hiring desired talent. As with budget reductions, staff reductions dropped nearly to pre-COVID-19 levels in 2021 (18% vs. 12%). Overall, (67%) of respondents said staffing remained unchanged – higher than the previous year (64%).

Risk Assessment Trends: For the first time in the survey's history, sustainability (ESG) and nonfinancial reporting risk levels edged upward, especially for publicly traded organizations. But the boost is not yet seen in audit plans.

Audit Plan Allocation Trends: Cybersecurity is trending up on audit plans for all respondents. For publicly traded organizations, audit resources dedicated to Sarbanes-Oxley (SOX) is increasing steadily.

For further details, download the 2022 North American Pulse of Internal Audit: Benchmarks for Internal Audit Leaders.

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About The Institute of Internal Auditors

The Institute of Internal Auditors (IIA) is an international professional association that serves more than 210,000 members and has awarded 180,000 Certified Internal Auditor (CIA) designations worldwide. The IIA is recognized as the internal audit profession's leader in standards, certification, education, research, and technical guidance throughout the world.

SOURCE The Institute of Internal Auditors