Anyone who knows me or follows this blog and my social media presence knows that I am not "thin-skinned" when it comes to constructive criticism of the internal audit profession. I am confident in the remarkable progress that our profession has made and the stature that it now enjoys. I even discuss opportunities for our profession to improve when speaking at internal audit conferences and other events because I believe bringing issues to light can make our profession stronger. But when I read what I believe is misleading research, or when I see inaccurate headlines/articles directed at the profession, I will always make a vigorous effort to set the record straight. Such is the case with a recent research report from a group of Brigham Young University professors and an ensuing CFO.com article.
The CFO.com article generated some strong reactions from internal auditors, and I was among those who took exception to the headline in my own posted comment. While I believe the researchers were well intentioned, their lack of understanding of modern internal auditing was evident. The primary focus of their research was accounting students nearing graduation. According to the professors, these students were less likely to apply for an internal audit position than an accounting position. Unfortunately, there are two problems with that "news flash." First, while accounting students are still an important source of talent for many internal audit departments, The IIA's latest survey of chief audit executives (CAEs) indicates that "accounting skills" now rank 7th among the most highly recruited skills for internal auditors. So, if there is diminished interest on the part of some accounting students in internal audit positions, it may well align with the diminished interest of CAEs in actually hiring the accounting students themselves. The second point that should be considered when weighing how serious these results are for the profession is the fact that only about one-third of internal audit departments even recruit college students at all. The two points combined genuinely diminish the impact of a small percentage of accounting students preferring to work in an accounting role rather than in internal auditing.
More important than the points outlined above, I believe the researchers may have failed to appreciate how much the landscape has changed for internal auditing. Modern internal audit departments are focused on so much more than assessing the adequacy of financial controls. In a recent survey, CAEs told The IIA that only about 25 percent of their 2013 audit plans would focus on financial-related risks or controls at all. Meanwhile, almost half of internal audit plans will be focused on operating, compliance, and IT risks. Addressing these risks requires far more than an academic background in accounting. It requires deep expertise of the business/industry in which the enterprise operates. It also requires specialized expertise that may or may not be part of an academic course of study in accounting.
There are several outstanding academic programs that prepare students for careers in internal auditing. Schools such as Louisiana State University, The University of Texas at Dallas, and The University of Houston have excellent programs that not only prepare students for careers in accounting, but prepare them to leverage that knowledge in far more challenging and rewarding ways in internal auditing. They are joined by more than 40 colleges and universities around the world that are part of The IIA's Internal Auditing Education Partnership.
As for CFO.com, the lack of understanding about how internal auditing is being leveraged (and even who internal auditors work for) is apparent from both the article's headline and the message delivered. Only about half of internal audit departments even have an administrative reporting relationship to the chief financial officer these days. The advice to "finance chiefs" on how to attract internal audit talent seems to be seriously misplaced given that few if any of them would be involved in recruiting internal audit talent to begin with.
Finally, I must address the question posed by CFO.com about whether internal audit is a "dead end" profession. Frankly, the suggestion is beyond ludicrous. In many companies, internal audit has become a pipeline of talent to the business. Based on recent data, we estimate that more than two-thirds of Fortune 500 audit departments now consider all or a portion of their internal audit positions to be part of a rotational model or executive development program. Internal auditors get to see all aspects of the organizations they work for, and they make important contacts with senior management, so it shouldn't be surprising to learn that a stint in internal audit is often viewed as a path for career development. Each year, tens of thousands of new professionals assume internal audit roles. Almost as many individuals leave the profession each year to assume roles of increased responsibilities within their organizations.
A "dead end" profession? I hardly think so. Internal auditing is a highly challenging field that can lead to almost unlimited opportunities. Some of those opportunities are in the accounting field, and we will always need professionals with strong accounting backgrounds among our ranks. But in internal auditing, the sum is greater than the parts, and our profession is made stronger by the fact that we draw on the best and brightest from a wide variety of backgrounds.