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2013: Time to Seize the Opportunity
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• Conducted February 2013– 5th consecutive year
– 37% of organizations earn
$1 billion USD or more in
annual revenue
– 63% of respondents work in
public or private companies
• 1700 Responses– 74% of respondents are audit
managers or above
– 63% are CAEs
• Geographic Distribution
of Survey Respondents– 33% North America
– 29% Europe
– 17% Latin America
– 9% Asia Pacific
– 9% Africa
2013 Global Survey
Demographics
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Four Key Trends Emerging
in 2013
1• Elevating Our Stature
2• Standing Our Ground
3• Doing More With More
4• Changing Our Game
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Elevating Our Stature
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Internal Audit’s Stature
• Often reflected by:
– How internal audit is perceived
– How the function is used
– To whom the chief audit executive
(CAE) reports
• Reporting relationships
– Administrative reporting relationship
– Functional reporting relationship
• Has consistently migrated upward over the
past decadeSource: The IIA Audit Executive Center
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Chief Financial Officer (CFO) –
21%
Other –14.5%
Internal Audit Administrative
Reporting Relationships
Chief Executive Officer (CEO) –
43%Audit Committee
(AC) – 9%
Board of Directors (BoD) – 8%
Chief Compliance Officer – 1.5%
General Council – 3%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
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Internal Audit Administrative
Reporting Relationships
CEO – 33%CFO – 37%
CEO – 51%CFO – 12%
CEO – 56%CFO – 22%
CEO – 50%CFO – 13%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
CEO – 52%CFO – 12%
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Other 10%
Internal Audit Functional
Reporting Relationships
CEO – 18% Audit Committee –54%
Full BoD –12%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
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Internal Audit Functional
Reporting Relationships
AC – 73%Full BoD – 3%
CEO – 10%
AC – 37%Full BoD – 20%
CEO – 28%
AC – 77%Full BoD – 2%
CEO – 11%
AC – 41%Full BoD – 21%
CEO – 22%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
AC – 62%Full BoD – 7%
CEO – 21%
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Standing Our Ground
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Standing Our Ground
• Our stakeholders look to us for:– Objective assurance on risk and controls
– Insight on business risks
– Advise and assistance as warranted
• Stakeholders also look for us to:– Demonstrate courage
– Deliver difficult news when warranted
– Call it like it is
– Not change or conceal results under duress
• Survey indicates we are “standing our ground”
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Business Function/Role Respondents Answering “Yes”
Operating Management 20%
Chief Executive Officer 12%
Chief Financial Officer 12%
Legal or General Counsel 5%
Full Board of Directors 4%
Audit Committee 4%
Chief Compliance Officer 4%
Chief Risk Officer 3%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
Have Any of the Following Ever
Attempted to Unduly Influence
an Internal Audit Report?
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Report to: Percentage
Audit Committee 52%
Chief Executive Officer 19%
Full Board of Directors 18%
Chief Financial Officer 1%
Legal or General Counsel 1%
Other/Unsure 9%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
23% of Respondents Believed
Internal Audit Would Be More
Independent if It Reported to:
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Doing More With More
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Positioned for Success
• Financial crisis impact on internal
audit resources was swift and
noteworthy in the areas of
• Staffing
• Budgets
• By 2011, more than 40% of
internal audit functions reported
reduced staffing
• After a sluggish recovery, 2013
is poised to be the strongest year
since 2007
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The Outlook for Global Internal
Audit Resources is Strong
• Budgets:
• Staffing:
Increase Stable Decrease
Overall 33% 55% 12%
Change from 2012–2013
Increase Stable Decrease
Overall 22% 69% 9%
Change from 2012–2013
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
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The Outlook for Global Internal
Audit Budgets by Region
+39%- 11%
+48%- 3%
+47%- 7%
+19%- 14%
+47%- 10%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
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The Outlook for Global Internal
Audit Staffing by Region
+23%- 7%
+24%- 4%
+20%- 6%
+17%- 10%
+22%- 6%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
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Changing Our Game
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Changing Our Game
• Rebalancing of internal audit plans has
been ongoing for several years. Driven by:
- Changing risks and expectations
- Compliance burdens
- Risk management assurance
- Technology
• Requisite skills must evolve and
broaden to address emerging risks
• Successful CAEs must have prescience:
the ability to “see around corners”
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Fraud – 5%
Operational (OP)–28%
Financial (FIN) –21%
Compliance (COMP) 14%
Strategic/Business – 5%
Other –11%
Risk Management Assurance 7%
IT – 9%
Distribution of Typical Internal
Audit Coverage in 2013
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
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Distribution of Typical Internal
Audit Coverage in 2013
OP - 27%FIN – 27%*COMP – 15%
OP - 29%FIN – 18%
COMP – 13%
OP - 27%FIN – 19%
COMP – 14%
OP - 31%FIN – 15%
COMP – 14%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
* Inclusive of Sarbanes-Oxley work
OP - 29%FIN – 19%
COMP – 12%
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Analytical/critical thinking 72%
Communication skills 54%
Risk management assurance 44%
IT (general) 41%
Data mining and analytics 37%
Accounting 33%
Industry-specific knowledge 32%
Business acumen 29%
Source: “The Pulse of the Profession: © 2013 The IIA Audit Executive Center
Requisite Skills For Internal
Auditing Continue to Evolve