As pressure mounts worldwide for internal audit functions to provide greater assurance over a wider area of the company’s operations, many internal auditors here find themselves under-equipped, under-resourced and under-appreciated.
These observations were drawn from the Internal Audit Survey 2013, a joint survey of the internal audit (IA) profession by the Asia Centre of Excellence for Internal Audit (ACEIA) of the Singapore Accountancy Commission (SAC), and KPMG in Singapore.
Increasingly, governance, enterprise risk management, fraud, information technology and operations and strategy are being added to the growing list of areas IA has to look into. With this expanded focus, there has to be concerted efforts to grow IA resource, talent, skills and the profession.
“The increased burden of managing internal controls and risk which have come in recent years has fallen squarely on the shoulders of internal auditors,” says Irving Low, Partner and Head of Risk Consulting at KPMG in Singapore, “As more roles are added to the IA portfolio, clear distinctions between functions have to be established at the onset. This would prevent duplication of work and ensure tasks are undertaken by the right people with the right skills.”
About a third (24 percent) of senior management surveyed indicated they did not appreciate the role or contribution of IA to their organisations. According to 53 percent of the respondents, IA capacities should be less than external audit, and 62 percent indicated that their IA budget is smaller than that for external audit.
The survey also reveals that close to 70 percent of companies surveyed have fewer than five employees in their IA function. In all, 90 percent of respondents had IA teams with fewer than 30 staff. With rising expectations and regulations, this suggests many teams are under-resourced.
Only 41 percent of companies surveyed indicated that their IA utilises tools and technology such as data analytics. Investments in IT tools for IA functions have clearly not kept pace with the increasing demands placed on them.
Some 44 percent of chief audit executives surveyed indicated that co-sourcing or outsourcing is the most cost-efficient means of obtaining the range of IA skill sets needed.
Almost nine-in-ten, or 86 percent of chief audit executives surveyed indicated that they use external consultants to fill skill gaps.
More than half (52 percent) of chief audit executives indicated that IA was not a good training ground for future leaders. This clearly shows that more needs to be done to make IA an attractive profession given the increasing demands placed on the profession.
Looking ahead, IA is expected to play a more active role in improving the company’s activities and processes given emerging trends in governance. Mr Low added, “The revelation that many members of senior management do not appreciate IA’s role and contributions to their organization is a cause for concern. IA and senior management will need to work at closing perception and expectation gaps.”
“As with any profession, expectation and perception gaps exist. In delivering on SAC’s mandate, we hope to effectively minimize, if not entirely remove, such gaps. We will have to better brand IA, expand certifications and standards to drive excellence in IA, and provide thought leadership on the future of the profession,” says Uantchern Loh, Chief Executive of Singapore Accountancy Commission.