Ernst & Young: Chief audit executives acknowledge room for improvement

By Rob Starr, Content Manager, Big4.com

A new global survey of 695 chief audit executives (CAEs) and C-suite executives from Ernst & Young today shows that 80% of organizations acknowledge internal audit function needs to improve. The future of internal audit is now report, highlights that 75% of respondents believe strong risk management has a positive impact on their long-term earnings performance and an equal percentage believe their internal audit function has a positive impact on their overall risk management efforts.

Internal audit risk assessments, regulatory requirements and enterprise risk assessments are the top three drivers of the audit plan, and internal audit is playing a more prominent role in organizational issues, such as major capital projects (49%), IT systems implementations (42%), mergers and acquisitions (37%) and material contracts (32%). Technology also remains a key area of focus for internal audit functions, comprising 18% of the current audit plan.

Forty-six percent of respondents indicated that their internal audit functions perform annual updates, or none at all, leaving themselves unprepared for events that could crop up throughout the year including transactions, new product launch or retirement, new market entry, patent expiry and litigation.

Nearly one-fifth of respondents indicated that they would like to see improvements to internal audit reporting by putting issues into perspective relevant to the risk and identifying trends. Thematic audits are one way of doing this and are making resurgence as stakeholders increasingly want to know the implications, magnitudes and insights that audit findings convey.