Not everyone is focused on career climbing, though, and according to Nicoletti, that is for the best. “You have to have some people in the department who want their career to be in audit,” he said. “It’s beneficial to have that balance with people on the staff who have been in other areas and are cycling through.”
Success in a CAE role requires two sets of skills that have little to do with one another: technical accounting skills and leadership skills. But all things being equal, which is more important?
“I would say we’re in a slight move away from the demand for [technical] credentials,” said Eldridge. Some employers are taking the position that a proven leader who is not a certified public accountant is preferable to the opposite.
Nicholetti of Alberto-Culver agreed. A chief auditor is best served by having solid business management and risk management experience, he said. “It’s better to have a leadership role on the operating side before going into audit. If you came up only through the audit function you could do a good job, but you would be more effective if you had been through a more broad base of experiences.”
Wal-Mart’s Fung took the opposite side of the issue. “You have to have the auditing and technical skills,” he said, “so you can satisfy the risk issues for the audit committee and your outside auditors. Hopefully you can pick up the leadership skills.”
But Eldridge counseled that anyone who has focused purely on the technical side should “do anything and everything possible” to get experience running projects and committees, if they hope to be promoted to CAE or any other senior finance position.
The Bottom Line
Along with the inflated status of audit chiefs has come higher pay, though variability in the level of compensation is extreme — Eldridge called it a “scatter-gram.”
“Pre-Sarbanes-Oxley, compensation for internal audit lagged finance pretty significantly,” he said. “Now many of our clients are asking: how do we retain our people? I tell them very simply to catch up on compensation. There is still a lot of catching up to be done.”
The best compensation opportunities are likely to be at companies where the internal audit, risk, and compliance functions have been placed under an umbrella, which Eldridge characterized as a recent trend.
That change reflects the increasingly popular view of the diverse roles these functions can play, a view MEMC’s Hannah has had for years. They are especially critical if they can “move from the basic internal control and compliance work to more value-added activities like operational reviews, process-effectiveness reviews, special projects, and development of future leaders,” he said.
If internal auditors spend all their time just auditing to satisfy Sarbanes-Oxley requirements, Fung said, “it will hurt the auditing profession and the development of people. I think my success, both in internal auditing and my career generally, is trying to really understand what drives the value for the business, whether that’s in sales, in margins, our competitive edge with customers, or how we compete in our markets. So I prefer the operational auditing approach. Ultimately, you have to be a business person.”