• Auditing
  • CFO.com | US

Internal Auditors Want Larger Budgets for 2013

More than 40% of chief audit executives are proposing bigger budgets for next year, according to an Institute of Internal Auditors survey, but not many are looking to hire.

While many corporate departments are striving to keep a lid on spending in 2013, more than 40% of internal auditors surveyed recently said they plan to increase their budget — the largest proportion aiming to do so since 2008.

The Institute of Internal Auditors’ Audit Executive Center survey in November noted that a greater percentage of chief audit executives (CAEs) intend to raise their internal auditing budget than in any of the previous four years. The survey, which interviewed 545 CAEs and internal audit directors from North America, revealed that 41% intend to raise their budget for 2013, up from the 37% who said they would for 2012. In addition, a smaller percentage of survey respondents (9%) than last year (17%) said they would decrease their projected budget next year.

Although 50% of those surveyed actually plan to keep their budget stable for 2013, the amount looking to increase their budget is still noteworthy, according to Richard Chambers, president and CEO of the Institute of Internal Auditors. The results, he says, show the value that CEOs, CFOs, and other senior managers are placing on what internal audit is doing.

Audit committees’ closer scrutiny of internal-audit resources could be another reason for the proposed increase in budgets, adds Chambers. “They [audit committees] are typically asking CAEs in both open sessions with management and in executive sessions without management if internal-audit resources are adequate to address the key risks of the organization.”

Just where will those larger budgets be spent? “It would appear a fair amount is discretionary spending rather than being directly linked to staffing increases,” says Chambers, “but staff increases are likely to happen next year.” In the Institute of Internal Auditors’ Audit Executive Center survey, 24% said they plan to hire for 2013, up from 21% looking to hire last year. More than 70%, however, said their hiring would be flat in 2013, up from 65% last year.

Chambers says that when internal-audit heads hire, they look to augment their staff with particular expertise, ranging from derivatives to regulatory compliance. Sometimes they also call in third-party sources for guidance, which could also account for some of the budget increases.

Internal auditors could also be planning to allocate more resources to regulations such as the Foreign Corrupt Practices Act. Compliance with the FCPA is a significant challenge for many big companies, particularly those with global operations, says Chambers. “We’re seeing internal auditing increasingly getting involved in that,” he says.

Discuss

Your email address will not be published. Required fields are marked *