The IIA Research Foundation undertakes a global survey every five years to assess the state of the practice of the internal audit profession. This Common Body of Knowledge (CBOK) research has been undertaken periodically for decades, and it has provided a rich window into the profession for The IIA, academic researchers, internal audit practitioners, and others around the world.
The CBOK 2015 Practitioner Survey, the third global initiative of its kind, was offered in 23 languages with participation from 14,500 practitioners representing more than 150 chapters and 106 institutes in 166 countries/territories. By the time all of the research is analyzed, more than 25 reports will be produced based on the CBOK results, all of which will be accessible and downloadable from the CBOK Resource Exchange website. More than a dozen are planned for 2016.
Like many internal audit professionals, I have been intrigued by the CBOK reports produced to date and have found them to be a source of valuable insight into the state of the modern internal audit profession. However, I couldn't help but want to look at the raw data myself. With the help of IIA Research Foundation staff, I recently sat down to pore through a 255-page document containing the responses to the almost 100 questions in the CBOK practitioner survey. I was looking for valuable nuggets of information that would validate for me the progress the profession is making. There were plenty to be sure.
There was lots of good news for the profession in the data. For example:
- More than 28 percent indicated permanent internal audit staff levels increased over the past year.
- More than 40 percent indicated their internal audit budgets increased over the preceding year.
- Respondents indicated that internal audit coverage was closely aligned with top risks on the minds of audit committees and management.
- Almost half of respondents indicated that internal audit provides assurance on risk management as a whole, and more than 57 percent provide advice and consulting on risk management activities.
- 65 percent responded that critical/analytical thinking skills were being recruited for their functions.
- More than 80 percent operate under a formal internal audit charter.
There were also statistics that indicate opportunities for improvement. For example, more than one-fifth of respondents indicate that they only conduct a risk assessment once a year, and use that as the basis for their audit plan for the upcoming year. Furthermore, only about 18 percent update their audit plans three or more times each year. This is hardly a recipe for auditing at the speed of risk.
One of my objectives for reviewing the raw data, however, was to identify some key statistics that would indicate the progress the profession is making in the second decade of the 21st century. I was looking for critical indicators that the profession is still on the remarkable trajectory that has characterized its progress for the past 30 years. I found plenty of such statistics, but there are five that are worth highlighting at every opportunity:
- Only 57 percent list accounting as the most significant field of study. This statistic is particularly amazing when the history of the profession is clearly understood. In past eras, it would have been unthinkable for almost half of the internal audit staff to come from other fields of study. However, as the profession has migrated to a more risk-centric mission, the skills and expertise of internal auditors have evolved as well.
- More than 70 percent of internal auditors plan to stay in the profession for five years or longer. This is great news for the profession! Recent trends have given cause for concern that the profession was becoming increasingly transient as more companies introduced rotational staffing models. With more than 70 percent planning to serve in internal audit roles beyond 2020, the progress being witnessed by the profession should continue for the foreseeable future.
- More than 86 percent use a risk-based methodology to establish their audit plans. For a profession that didn't even require risk-based auditing in its standards until 2002, this statistic reflects remarkable progress. The next hurdle for the profession is to deploy more continuous auditing methodologies for assessing risks.
- Globally, CAEs are three times more likely to report to the CEO than CFO. This trend has been evolving for more than a decade, and the CBOK results would indicate that the era of CFO oversight of internal audit may be finally coming to an end. Almost 50 percent of respondents indicated that CAEs report administratively to the CEO. It is important to note, however, that the CFO reporting relationship is still stronger in North America than in other regions of the world, so there is still a way to go in universally achieving the optimal administrative reporting to the CEO.
- More than 60 percent of the time, the board, audit committee, or their respective chairmen make the final decision on appointment of the CAE. This statistic might have been unthinkable during past generations. However, as audit committees and boards have taken on functional oversight responsibility on internal audit, they have asserted themselves in the appointment of the CAE as well. There is still room for progress. The time should come when CAE appointments would have to be approved by the Board or audit committee in all organizations. It is also worth noting that the CBOK data revealed that only about 48 percent of the time does the board, audit committee, or their chairmen evaluate the CAE's performance.
I always glean a great deal of insight from review of internal audit survey data. The process reenergizes me. I pledge that I will continue my part to build on the progress the profession is making while dedicating my energy, and that of The IIA, to lead the profession in responding to those areas that warrant improvement.
The final chapter of the 2015 CBOK project will be publishing results of the Stakeholder Survey starting in the coming months. Once again, I am sure we will see progress as well as improvement opportunities for the profession.
I welcome your thoughts on the progress of the profession.