After years of stagnation, companies may be finally ready to put more funding behind the internal audit function, says a recent study
During recessions and cyclical downturns, companies cut, cut, cut as they try to hit their suddenly overly optimistic projections. And then in leaner times they appropriate more resources to projects as they work to gain back market share and fuel growth.
The long-term budget trends for internal audit, however, haven't followed this ebb and flow. For several years, internal audit budgets have mostly been flat or declining. Many companies found that with the increased use of technology they could cut staff. Others have found it more economic to outsource some of internal audit's duties at a discount. Especially since the financial crises, the trend has been to reduce internal headcount and budget. That trend may finally be starting to turn around.
A recent study by the Institute of Internal Auditors finds that companies may be getting ready to devote more resources to Internal Audit. The numbers aren't overwhelming, but more companies report that they are increasing budgets than those that say they are making cuts over the next year.
According to the study,Global Perspectives and Insights: Emerging Trends, 35 percent of the internal auditor respondents said their organizations expect the overall budget of the department will increase and another 56 percent expect it to stay the same. Only 9 percent are forecasting a smaller budget in the next year. The numbers for headcount are equally encouraging. More than a quarter (26 percent) say their departments expect to increase the number of full-time equivalent staff in the audit function during the next 12 months, and 68 percent say they will remain the same. Just 6 percent are cutting staff.
"Anticipated increases in the internal audit staff size and budget in many parts of the world reflect a recognition of, and support for, internal audit's elevating value by executive management and boards and enable internal audit functions to increase time devoted to critical areas such as risk management assurance, strategic business risks, and IT," the report's authors wrote.
According to the study, companies may be putting more funding behind internal audit to help address key vulnerabilities, including cybersecurity. Indeed, internal auditors with technology savvy have been in high demand. It's also true that salaries for top internal audit staffers and executives have been climbing recently, meaning that internal audit budgets may need to increase just to keep pace.
Still, the responses are projections into the future. Whether those budget and staffing increases actually materialize still remains to be seen. After years of cutting, it would be a welcome change for internal audit shops.