Grant Thornton survey finds chief audit executives facing greater compliance burden

March 25, 2014 – Chief audit executives (CAE) are facing the realities of a greater compliance burden according to Grant Thornton LLP’s fourth annual CAE Survey. With limited internal audit resources, compliance requirements often take top priority.

“The dilemma many CAEs face is how to continue adding strategic value through the internal audit function, given the current compliance-heavy environment,” said Warren Stippich, a Chicago-based partner and Grant Thornton’s national Governance, Risk and Compliance practice leader. “The solution is not to leave compliance behind as an un-chosen option in the place of focusing on strategic and/or operational areas — but instead to understand how CAEs can leverage compliance activities to add value.”

As many internal audit executives are being forced to make difficult decisions, a critical piece of maximizing internal audit efficiency and impact, while adhering to the current compliance-heavy environment, is to fully utilize existing resources. If internal audit departments are utilizing a disproportionate amount of resources on compliance activities, there could be significant lost opportunities. Determining the right mix of resources for an organization is an important job function for CAEs.

The CAE Survey also reveals that leveraging the “one-to-many approach” has been slower to catch on. Fifty-four percent of respondents indicate they have found ways to implement one-to-many, an increase from last year’s 49 percent. A full 92 percent of respondents believe they can potentially apply one-to-many principles to approximately 50 percent of their control testing. This leaves a large group (38 percent) of potential one-to-many users that have not yet embraced the practice.

Internal audit departments continue to remain slow to maximize technology to gain efficiencies. Just 29 percent of respondents report their companies are using governance, risk and compliance (GRC)-specific technology, up from 23 percent in last year’s survey. While adoption numbers have increased, only 22 percent of respondents believe their organizations effectively leverage GRC technology.

Data analytics continue to remain popular with CAEs, with 60 percent of survey respondents using data analytics to enhance the internal audit function. The top reason cited for using analytics is the ability to quickly identify patterns, trends and relationships. CAEs also use analytics for such other tasks as forensic analysis (26 percent), performance measurement (18 percent) and predictive analytics (28 percent).

Other highlights from the survey include:

• Sixty-nine percent of survey respondents cite increased cost as the top impact of regulation on their organizations;
• Forty-five percent of respondents feel that regulation improved their governance and rigor of testing;
• A majority (69 percent) of survey respondents see increased cost as the biggest impact of regulation, with another 36 percent feeling that regulation left them unable to devote resources to higher-value activities; and
• A low 18 percent of respondents have already started transitioning to COSO’s updated guidance on internal controls, while 35 percent say they will start the transition in the next 12 months. Twenty-four percent of respondents have no plans to transition to the new framework.

Please visit Grant Thornton’s Chief Audit Executive Survey for a copy of the survey findings.

About Grant Thornton LLP’s Chief Audit Executive Survey
The 2014 survey of U.S. CAEs aimed to uncover how internal audit is adjusting to the evolving expectations of its role. The survey was administered online from November to December 2013, with a total of 433 internal audit professionals responding. Responses came from public and private companies in geographically dispersed U.S. locations representing a wide range of organizational revenues. Respondents work in a variety of industries, including professional services, consumer products, technology, health care, not-for-profit and manufacturing.

About Grant Thornton LLP
Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

SOURCE: Grant Thornton LLP