Effects of Economy on Internal Audit Staffing and Sourcing

In a new Knowledge Alert, Recent Impacts on the Staffing and Sourcing of North American Internal Audit Activities, The IIA’s Audit Executive Center assesses the impact of the economic recession on staffing and sourcing of internal audit activities. The report is based on a survey of 817 members of The IIA’s GAIN Flash Survey Network who represent Fortune 100, Fortune 500, and Fortune 1,000 companies.

According to the report, internal audit activities have experienced staff reductions for the past two years, with 2009 yielding the greatest impact. More specifically, nearly twice as many survey participants, including those working in Fortune 500 companies, reported internal audit staff decreases in 2009 compared to 2008. However, survey results indicate that the worst might be over. Twenty-three percent of internal audit activities experienced staff reductions during 2009, but that number is expected to drop to

The report also presents survey results regarding:

Staffing models in use. Sixty-nine percent of respondents indicated that their internal audit activity has a staffing model consisting only of career internal auditors. However, 31 percent of the internal audit activities represented in the survey have a rotational model in place; 28 percent have a staffing model consisting of a blend between career internal auditors and rotational positions; and 3 percent have internal audit activities consisting only of rotational positions.
Skills assessment. When asked to assess the current skill level of their staff in addressing key risks impacting the internal audit profession, all survey respondents selected International Financial Reporting Standards (IFRS), data analytics, liquidity, fraud and forensics, and sustainability as the top five risk areas where internal audit skills are lacking or insufficient.
Staffing internal audit operations and sourcing. One percent of all survey participants outsource 100 percent of their internal audit engagements. However, 48 percent of all survey participants augment their internal audit engagements with professional service firms, while 44 percent of all survey participants perform 100 percent of audit engagements with internal staff.
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