Chief Audit Executive Survey

© Grant Thornton LLP. All rights reserved.

Rising to new challenges: The view from the office of the CAEGrant Thornton 2012 CAE Survey

© Grant Thornton. All rights reserved.

Overview

1. Survey summary

2. Use of technology

3. Emerging risks

4. Audit focus

5. Antifraud and risk management

6. Board relationships

7. Career path

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1. Survey summary

• Grant Thornton’s second annual survey of approximately 300 chief audit executives (CAEs) from U.S. institutions

• Chief audit executives are shifting their mindsets from a compliance orientation to a more progressive value enhancement orientation in considering how to meet this charge and help their organizations drive continued growth.

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2. GRC technology usage slow to boot up

• Half of respondents disagreed with the statement that their organizations effectively use GRC-specific technology

• 79 percent said they were not using a GRC tool • Respondents ranked cost of effort and time to

deploy, cost of seat license, and difficulty to maintain and support as the top obstacles

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2. GRC technology, cont.

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• Data analytics still has a solid foothold in internal audit with 64 percent of respondents using

• More efficient internal audit process is the top reason for using data analytics

• Continuous auditing use is up; 42 percent of respondents performing it to some degree, up from one-third in last year’s survey

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3. Emerging technology risks require attention

• More than one-third of respondents acknowledged that cloud computing represents a significant organizational change and that they understand the implications

• Although many CAEs have a raised awareness, half of those surveyed said cloud computing is not part of their audit plan

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3. Emerging technology risks, cont.

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• Other emerging risks of concern to CAEs, in order of priority, include cybersecurity, mobile technology, business interruption and social media

• 42 percent of respondents said they see the greatest cybersecurity threat to their organization coming from external hackers or other outside parties

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4. Audit focus

• Asked to rank the importance of their audit focus in four key areas, financial risks ranked first, followed by operational, compliance and strategic risks

• 42 percent of respondents have a portion of their internal audit scope conducted outside the country, up slightly from 2011

• If they perform global internal audit, most put domestic internal audit professionals on airplanes

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4. Audit focus, cont.

• Despite increasing attention by businesses to the emerging economies of Brazil, Russia, India and China (the BRIC countries), 44 percent do not have an internal audit focus on these countries

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• An overwhelming majority of respondents (97 percent) expect staffing to stay at the same level or increase in the next 12 months, with one-quarter expecting to add staff members

• Most respondents represented organizations with 10 or fewer audit professionals (75 percent), while 13 percent had between 11-25 staff members

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• 63 percent of respondents have in-house audit departments

• 34 percent have a co-sourcing arrangement, and one-fifth expect their use of an internal audit provider to increase in the next 12 months; 63 percent say it will stay the same

• The top reasons for outsourcing or co-sourcing arrangements are subject matter expertise, staffing and managerial support

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5. Antifraud and risk management

• Conducting fraud investigations remains a common internal audit activity, as cited by 76 percent of respondents

• Internal audit leads 36 percent of fraud investigations

• More than three-quarters of CAEs said their organizations have formal anti-fraud measures in place

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5. Antifraud and risk management, cont.

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• Growing in importance is the monitoring of intermediaries in foreign locations with respect to anticorruption – Respondents said their top tactics for managing

risks in this area include using compliance monitoring, conducting due diligence and performing an annual certification/background check.

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• Changes in the regulatory environment was ranked as the number one risk to a company's governance performance

• Most CAEs, 83 percent, do not think Sarbanes-Oxley should be repealed

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6. Board relationships

• A majority of CAEs (81 percent) surveyed noted that they report functionally to the audit committee

• Asked to rank the value of specific internal audit services from the board’s perspective, CAEs placed risk monitoring and separate evaluation as the highest

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6. Board relationships, cont.

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6. Board relationships, cont.

• 60 percent of CAEs said they take issues to the audit committee that run counter to management’s view, which is up 8 percent from last year’s results

• Internal audit takes an active role in setting the agenda for the audit committee, a task 81 percent of respondents said they perform

• 76 percent said internal audit does not conduct training for the audit committee

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7. CAE careers

• Although many CAEs view their post as a final destination on their career path, 56 percent said they see internal audit as a grooming place for future leadership roles elsewhere in their organizations

• 32 percent were neutral on whether internal audit is a grooming place and 12 percent disagreed with this assertion altogether

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7. CAE careers, cont.

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7. CAE careers, cont.

• 40 percent see their next career step being an executive management position within their company or another organization

• 26 percent indicated that they expect their next career step to be another CAE role

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Summary

With the recession behind them for the most part, and promising economic signs emerging, organizational demands are pulling internal audit in new directions. CAEs strive to balance competing goals and initiatives, while cultivating areas of opportunity.

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Questions

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For more information

Visit www.grantthornton.com/CAESurvey

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http://www.grantthornton.com/CAESurvey


Contact

Warren Stippich

Partner and National Governance, Risk and Compliance Solution Leader

T 312.602.8499

E [email protected]

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Chief Audit Executive Survey