Survey Benchmarks Internal Audit Direction

Survey Benchmarks Internal Audit Direction

J Whitley. The Internal Auditor. Altamonte Springs: Feb 2006. Vol. 63, Iss. 1; pg. 15, 2 pgs

Abstract (Summary)
Standards and regulatory mandates are among a host of factors impacting internal auditors in Australia and New Zealand, according to the second annual benchmarking survey, Trends in Australia and New Zealand Internal Auditing. Risk-based audit planning has become widespread in the two countries. According to the survey, many organizations are seeking auditors with a variety of experiences and backgrounds, including engineers and strategy consultants. The use of automated audit tools by internal audit departments jumped from 46% in 2004 to 73% in 2005. Survey findings suggest that public companies in Australia and New Zealand are seeking greater assurance of their internal audit activity.
span class="fullpost":>
Reputation Risk Increasing... EU Amends Accounting Laws ... Study Compares IT PCAOB Critical of AS2 Progress ... DOD to Authenticate Electronic Devices ... Diamond Dispute Settled ...

STANDARDS AND REGUlatory mandates are among a host of factors impacting internal auditors in Australia and New , Zealand, according to the second annual benchmarking survey, Trends in Australian and New Zealand Internal Auditing. The new report from IIA-Australia, IIA-New Zealand, and Ernst & Young (E&Y) compiles information about the audit activities of more than 170 organizations to provide a better understanding of how internal audit functions in both the public and private sectors are progressing to meet demands and expectations. The report compares the survey's findings and observations with results of the 2004 survey.

The report's authors say the internal audit profession is at a crossroads in Australia and New Zealand. "Internal auditors have the opportunity to capitalize on the new visibility and sponsorship they enjoy," the report states. "However an inability to live up to these new expectations may see an erosion of their resource base and a loss of credibility and diminishing support from stakeholders."

Risk-based audit planning has become widespread in the two countries. Eighty-four percent of organizations base their annual audit plan on the management principles of AS/NZS 4360:2004 Risk Management, the Australia and New Zealand standard that provides a generic guide for managing risk. In 57 percent of organizations, internal auditing works with other assurance functions to provide a summary of key risks and assurance coverage to management and board committees.

More than three-fourths of internal audit functions report to either the audit committee or the chief executive officer (CEO). Although primary reporting lines are often split, there are generally mechanisms to ensure that internal audit objectivity and independence are preserved. Among private-sector respondents in New Zealand, for example, 76 percent have audit committees that satisfy the requirements specified by the New Zealand Stock Exchange's Corporate Governance Best Practice Code, issued in 2003. The code requires audit committee members to have an accounting or financial background.

According to the survey, many organizations are seeking auditors with a variety of experiences and backgrounds, including engineers and strategy consultants. Respondents report that 54 percent of audit staff have a financial background, down from 66 percent in 2004. On the other hand, the use of automated audit tools by internal audit departments jumped from 46 percent in 2004 to 73 percent in 2005. Seventy-seven percent of respondents say their organization outsources parts of their internal audit activity, largely to obtain needed specialty skills.

Survey findings suggest that public companies in Australia and New Zealand are seeking greater assurance of their internal audit activity. Thirty-two percent of organizations have had an independent review of their internal audit function within the past two years, up from 25 percent last year.