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How mature is your internal audit department (or how mature can it be)? This subject is explored using responses from more than 2,500 chief audit executives (CAEs) in The IIA’s CBOK (Common Body of Knowledge) database. The findings were further supplemented through interviews with a small sample of CAEs from different regions in the world who commented on internal audit department maturity. Assessment of the internal audit department maturity is important because it helps build strategies to bridge the gaps between expected and realized internal audit quality. Maturity indicators are introduced to support principal stakeholders in deciding whether and how they can rely on internal audit departments’ services and guide CAEs in developing more mature internal audit departments. This report spans various industries in several global regions. It also reports on the influences of internal audit departments’ age and size, organization size, and degree of conformance with The IIA’s International Standards for the Professional Practice of Internal Auditing (Standards), among others. The report is organized in seven sections. Data was available to measure internal audit departmental maturity on the following indicators: Is almost fully aligned with the strategic plan of the organization Demonstrates agility and flexibility to adapt the internal audit planning and priorities to important changes in the strategic objectives of an organization Relies on a holistic risk assessment to build sufficient knowledge and understanding of the organization’s business at micro and macro levels Has an internal audit staff with a mixed background of traditional auditing skills and industry knowledge complemented with general business competence, critical thinking, and leadership skills Provides structured, documented, and diversified training programs for the internal audit staff Documents and continuously monitors the audit procedures to adapt them to the evolving environment Makes the internal audit strategy explicit and translates the strategy into key performance indicators (KPIs), which allow continuous monitoring of the achievement of the internal audit strategy Uses leading technology (like data mining, data analytics, and continuous/ real-time auditing) across the entire audit process to increase internal audit’s efficiency and effectiveness Has a Quality Assurance and Improvement Program (QAIP) for the internal audit department, which is aligned with the internal audit strategy and supported by a culture around continuous quality assurance and improvement In addition to these main findings, key action items are included in each section to help establish guidance in improving internal audit department maturity. 

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When an internal auditor elects to pursue certification, he or she takes a big step toward establishing a professional reputation that speaks loudly of integrity, dedication, and commitment to both the profession and his or her organization. This commitment is reflected in findings from the CBOK 2015 Global Internal Audit Practitioner Survey. For example: Forty-three percent of respondents worldwide say they hold at least one internal audit certification or qualification. The primary certification held globally is the Certified Internal Auditor (CIA) (held by 30% of respondents worldwide). The most popular internal audit specialty certification is the Certification in Risk Management Assurance (CRMA) (held by 9% of respondents worldwide). Non-internal audit certifications are held by 60% of respondents worldwide. Forty or more hours per year of internal audit training is achieved by 61% of respondentsworldwide.  Survey results also reveal which certifications are most popular in different parts of the world, providing valuable information for internal audit practitioners, aspiring internal auditors, and chief audit executives (CAEs). Other stakeholders such as regulators, executive management, audit committees, and executive recruiters will also find the information useful for purposes related to standards setting, benchmarking, and hiring. CBOK is the largest ongoing study of internal auditors in the world, with participation from 14,518 practitioners from 166 countries.

The evolution of the internal audit profession toward a more value-added risk assurance function continues to move forward. While technical skills are needed for day-to-day work, analytical/critical thinking and communication are personal skills that continue to be at the top of any chief audit executive’s (CAE’s) wish list. Practitioners with these skills have a higher probability of overcoming any technical deficiencies and stepping up to meet stakeholders’ value-added expectations. To find practitioners with these skills, CAEs need to have a deliberate talent management plan. They should prioritize identifying those candidates with key personal skills through behavioral assessments, looking at diverse academic backgrounds. When it is not feasible to hire staff for particular skills or needs, they can consider using resources in other areas of the organization (co-sourcing) or obtaining support from outside the organization (outsourcing). Finally, CAEs should establish development programs that further improve on personal skills while augmenting industry-specific knowledge and other technical skills. This report supports its conclusions with results from the CBOK 2015 Global Practitioner Survey, the largest ongoing study of internal auditors in the world. 

In 1941, when The Institute of Internal Auditors (The IIA) was founded, there was no internet, personal computers did not exist and open global communication among private citizens was a dream. Fast-forward to 2016: Technological innovation is rapid and disruptive, and touches almost every aspect of our lives. People and machines are becoming increasingly interconnected, accelerating digitization and shaping the Internet of Things. And almost every business today is, at its core, a technology business − one that relies on IT not only to operate, but also to innovate and enable future success. Another dramatic change that has occurred since The IIA’s founding: the number of companies across industries, and the globe, that are positioning women in board-level and leadership positions in increasing numbers. This is why, as The IIA celebrates its 75th anniversary, we chose to interview only female internal audit leaders for the latest edition of our Internal Auditing Around the World series. These women represent positive change in the business world and in the internal audit profession. Therefore, we believed they could offer a unique perspective on how technology is transforming internal audit functions for the better.

The requirements placed on the Internal Audit function (IAF) by internal and external stakeholders seem to be constantly increasing. As a result of the financial crisis, new laws and regulations have been introduced in the financial sector and supervisory bodies have tightened up and expanded their supervision. In addition, increasing critical attention is paid in the public domain to the design and operating effectiveness of companies’ governance and their reporting of non-financial information. As the IAF plays an important role in the governance framework, there has been a corresponding increase in the requirements placed on the IAF. Various stakeholders quite regularly publish interesting documents that introduce additional requirements regarding the quality of the IAF. Recently, the Monitoring Committee for the Dutch Corporate Governance Code presented its proposals for revising this Code. These proposals envisage a prominent position for the IAF, which is considered “complementary to the external auditor.” According to the Monitoring Committee: “It is important to have a good interplay between the Executive Board, the Supervisory Board and the Audit Committee, as well as a good communication with the internal audit function and the external auditor.” An important element in the proposals in relation to the effectiveness of the IAF is also included in guidance 1.5.1, which states that the Audit Committee should supervise “the relationship with - and compliance with the recommendations of and followup given to comments of - the internal auditor and external auditor”.  

In 2013 voerde De Nederlandsche Bank (DNB) een onderzoek uit naar de internal audit functie (IAF) bij de Nederlandse banken. Daarbij kwam op een bepaald punt de uitdagende vraag naar voren: “Wanneer is een IAF eigenlijk als effectief te beschouwen?”. In de gesprekken die we als IIA-bestuur met DNB daarover hadden, worstelden we aan beide kanten met deze vraag. Duidelijk was toen al wel dat er vele facetten zijn die in het antwoord op deze vraag een rol spelen. Ongeveer anderhalf jaar geleden startte een aantal internal auditors, afkomstig uit de financiële industrie, met een discussie over dit onderwerp. Nationaal en internationaal werd geïnventariseerd wat er beschikbaar was aan normenkaders, best practices en performance-indicatoren. Veel gesprekken en veel discussies vonden plaats om te duiden wat in welke mate kon bijdragen aan de zojuist weergegeven uitdagende vraag. Een dankwoord is dan ook verschuldigd aan eenieder die vanuit zijn of haar eigen achtergrond input heeft geleverd om tot dit resultaat te komen. Omdat die groep nogal wisselend is geweest, laat ik naamvermelding achterwege. Een naam die echter wel genoemd moet en mag worden, is die van Dennis Webbers. Hij was namelijk degene die zich onvermoeibaar toonde op de momenten dat het onderwerp even te diffuus leek om af te ronden. ‘When the going gets tough, the tough get going’. Zijn we erin geslaagd om een antwoord te geven op de vraag wanneer een IAF effectief is? Ik durf het niet met zekerheid te zeggen, omdat het antwoord op deze vraag van vele factoren afhankelijk is, bijvoorbeeld: in welke industrie opereer je, hoe is je missie verwoord, en hoe werk je samen met bestuur, commissarissen en de externe accountant? Hoe dan ook kan iedereen die kennis neemt van dit boekwerk, daarna voor zichzelf een aantal relevante indicatoren selecteren en komen tot een volwassen performance-meting en rapportage daarover. En dat is een enorme winst!

The profession of internal auditing has been making great advancements in performance, positioning, and perception. The CBOK 2015 stakeholder study confirms these advancements but also highlights opportunities for internal audit to push even harder, moving to the next higher level of value for organizations. This report focuses on providing initial findings specifically from North America. While there is much to be explored in the survey responses, at a high level, a clear picture emerges regarding the importance of risk and relationships. Specifically, in the eyes of stakeholders: Internal audit does many things well that could be considered foundational elements of the assurance work of internal auditing. There are opportunities for internal audit to add value to their organizations by spending more time focusing on risk identification and management in addition to assurance work. Internal audit should focus more on strategic risks, but exactly what the stakeholders mean by that is less than clear or consistent. Increased demands on internal audit will require chief audit executives (CAEs) to prioritize competing demands. Managing these conflicts requires strong relationship and communication skills. A brief discussion is provided for each of these topics. Future CBOK stakeholder reports will delve deeper into the feedback from internal audit stakeholders and the implications.

Conflicthantering en onderhandelen is een belangrijke competentie voor internal auditors. Deze scriptie heeft als doel het vaststellen van effectieve stijlen van conflicthantering. Het tweede doel is het leggen van de relatie tussen persoonlijkheid en conflicthantering en het in kaart brengen van de samenstelling van de beroepsgroep internal auditors op het gebied van hun persoonlijkheid. Er is literatuuronderzoek gedaan naar de effectiviteit van de stijlen van conflicthantering in relatie tot persoonlijkheidsdimensies. Daarnaast is gebruik gemaakt van de survey, Personality for Professionals Inventory (PfPI) om de samenstelling van de beroepsgroep internal auditors op persoonlijkheidsdimensies in kaart te brengen. De PfPI is gebaseerd op het Five Factor Model, dat vijf dimensies van persoonlijkheid beschrijft. Deze vijf dimensies zijn Emotionele Stabiliteit, Extraversie, Openheid voor ervaringen, Altruïsme en Consciëntieusheid. De resultaten van het literatuuronderzoek laten zien dat de conflictstijl Collaboratie voor internal auditors de meest effectieve stijl van conflicthantering en onderhandelen is. In deze stijl van conflicthantering staat de balans tussen de inhoud en de relatie centraal. Het is belangrijk om zowel oog te hebben voor de jezelf (inhoud) als de ander (relatie). Soms moeten auditors, als gevolg van regelgeving, een Competitieve stijl hanteren, omdat zij hiertoe verplicht zijn. Op basis van de survey is naar voren gekomen dat internal auditors op vier van de vijf dimensies significant verschillen van de normgroep en dat zij gelijk scoren op de dimensie Altruïsme. Op basis van deze resultaten kan geconcludeerd worden dat Nederlandse internal auditors meer dan gemiddeld in staat moeten kunnen zijn tot het vertonen van effectief gedrag in conflicten en onderhandelingen. Tenslotte worden beperkingen van onderzoek besproken en aanbevelingen gedaan voor de praktijk.

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Regional Reflections: Africa is a customized research report that provides an African perspective on the findings from CBOK 2015, the largest ongoing study of internal audit professionals in the world. Building on the 10 imperatives for internal audit that were presented at The IIA’s 2015 International Conference, this report highlights unique concerns for Africa and provides insights from internal audit leaders in the region. Ongoing changes in African economies and governance systems have created notable differences between regions within Africa, which will be described throughout this report. See appendix A for key demographic information about each of the regions analyzed. South Africa clearly leads the way in building a strong foundation in corporate governance, risk management, and internal audit processes. One of the key drivers is the King Report on Corporate Governance (King III), which has encouraged organizations to strengthen their boards and helped push the relevance and importance of internal audit up the agenda. These reforms have had a ripple effect across much of the continent. Good governance is now often seen as key to strengthening the competitive performance of African business and a crucial tool in the fight against corruption in some government departments and in the private sector. Africa’s internal auditors are well placed to support better governance and are playing a leading role within their organizations. They generally have good reporting lines to the board and involve their stakeholders in the audit process—crucially seeking feedback about their activities against agreed objectives to maintain the relevance of internal audit’s work. But many improvements are a work in progress. Risk management systems, for example, are not always formalized and reporting lines can be confused or not independent from executive management in some organizations. That has put too many chief audit executives (CAEs) under pressure from their chief executives to alter audit findings. These issues echo concerns shared by auditors in other parts of the globe. Africa’s CAEs are making the case for extra resources but need to continue to secure significant increases in expenditure on automated auditing tools. CAEs need to be seen playing a lead role in their organizations—and in their ambition for their departments, its skills, and training. But every auditor can join the fight. Investing in training and development—particularly those crucial, intangible communication and leadership skills, and technology-related skills—is going to be key if the region’s auditors are to fulfill their potential. 

Mitigating operational risk is becoming a priority for banks that want to avoid penalties, reduce the likelihood of regulatory investigations and rebuild tarnished reputations. That’s prompting a step-change in the way operational risk is viewed and managed – moving away from a siloed, backward-looking approach, and towards a culture in which operational risk is managed proactively, strategically and on an organization-wide basis.

The most effective chief audit executives (CAEs) position their internal audit departments to add value and inspire business improvement by maximizing the productivity and contribution of their internal audit cohort. But how do they: Set goals that inspire auditors to deliver insights that matter? Boost productivity with appropriate rewards? Address differences between generations? This report provides GREAT insights on how CAEs and other audit leaders can improve their practices for evaluating and motivating internal auditors. You will learn strategies for: Goal Setting: Align personal goals of internal auditors to internal audit department goals and the organization’s strategies. Retaining Talent: Retain talent amidst changing needs of internal audit and the business.  Equipping Employees: Build capability and capacity for internal audit overall and individually. Assessing Performance: Evaluate internal auditors against overall internal audit department performance. Treating Success: Provide incentives and recognition to motivate internal auditors. Plus, you will also learn the implications of generational differences among Baby Boomers, Generation X, and Millennials in the internal audit workforce. Finally, insights are shared from the CBOK 2015 Global Internal Audit Practitioner Survey, the largest ongoing study of internal auditors in the world.

As the leader of the internal audit function, the chief audit executive (CAE) is responsible for its effective and efficient management. Although these traditional advisor/internal watchdog responsibilities are still the CAE’s primary priorities, that role is increasingly being called on to provide the services of a business partner or consultant as well.* This expanded sphere of responsibility requires the CAE to acquire and augment certain soft skills in addition to the technical audit skills that are needed to perform the traditional CAE role. What are those skills? What sort of education, experience, and certifications tend to lead to the CAE position? Organizations want to know so they can identify and groom their next internal audit leaders. Internal auditors who aspire to be CAEs also want to know so they can carefully shape their career paths with the desired target in mind. The CBOK 2015 Global Internal Audit Practitioner Survey addresses many of these questions. Data was gathered on the demographic characteristics of CAEs worldwide and interviews were conducted with global CAEs to identify the types of skills that tend to facilitate a move into the CAE position. The data shows that the CAEs surveyed are predominantly males between the ages of 40 and 49. They have obtained at least a bachelor’s degree, most likely with a major in accounting. They have spent about 13 years in internal audit, seven of them in the CAE position. Most have an internal audit certification, likely a Certified Internal Auditor (CIA) credential. Of course, those characteristics vary based on geographic region and organization type and size. For example, CAEs in North America tend to be older than CAEs from other regions and more likely to have obtained the CIA certification. In addition to examining current demographic differences, this report takes a look back in time, comparing data from prior CBOK surveys to the 2015 results to uncover meaningful trends. For example, the percentage of CAEs with an internal audit certification has increased significantly from the 41% reported in 2006 to 53% in 2015. While education, experience, and certifications are important, they alone are not sufficient to propel someone to the CAE ranks. Personal skills and attributes are also evaluated by organizations seeking to appoint a CAE. This report discusses those soft skills by relaying insights gathered through interviews with a number of global CAEs. These leaders share some of the characteristics and skills they believe are must-haves for aspiring CAEs. 

How well are internal audit departments meeting the needs of the audit committee, and is the internal audit department receiving the proper support and oversight from the audit committee? The overall answer to these two questions is that both groups are doing better, but there are many opportunities for improvement. Key insights in this report include: Although the numbers are increasing, there are still too many organizations without effective audit committees (or their equivalent). The frequency of audit committee meetings varies dramatically between regions—sometimes related to the nature of governance in a country, other times related to the maturity of the governance function. The opportunity for internal audit to meet with the board or audit committee in executive sessions without management present is quite low in some regions and needs to be improved. Governmental (and some private) organizations are lagging in developing effective audit committees (or their equivalent). Author Larry Rittenberg, professor emeritus at the University of Wisconsin-Madison, served as chairman of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) from 2004 to 2009. Current information about the interaction between audit committees and internal auditors was obtained from the CBOK 2015 Global Internal Audit Practitioner Survey, the largest ongoing survey of internal auditors in the world.