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December 2007
By Gary Larkin, Managing Editor, Audit Committee Insights
Companies are struggling to find qualified internal audit talent, as audit departments cope with greater responsibilities while needing additional -- and different -- resources.
Corporate management is asking internal audit to find new ways to help achieve strategic objectives. They expect internal audit to extend its role beyond internal controls assessment, and use its quantitative skills and risk knowledge to help improve risk management and processes, and reduce complexity and costs.
To meet these responsibilities, internal audit departments generally require greater, specialized resources -- and that poses a challenge in the current business environment.
Euronet Worldwide Audit Committee Chair Jeannine Strandjord, who spoke at last week's KPMG Audit Committee Institute (ACI) roundtable in Kansas City, said the demand for talented internal audit professionals has increased appreciably.
"They [companies] are spending a lot more time finding qualified internal auditors," she said.
Internal Auditor Demand and Salaries Increasing
According to a 2007 salary survey by Robert Half, a recruiting and placement firm, demand for internal auditors is so great that it's one of the fastest growing professions this year.
Average salaries for internal audit managers at large companies range from $77,500 to $101,500, up 5.8 percent from 2006, according to Robert Half. Those at small companies can expect a 3.2 percent increase in base pay, to $36,750 to $44,500 per year.
Steven Frye, an audit partner with KPMG's Kansas City office, likened the job market for internal auditors to a run on a bank. "Everyone is reaching for internal auditors," Frye said, and there aren't enough qualified ones to go around.
Cosmetics maker Revlon has also witnessed the shortage of internal auditors in the Sarbanes-Oxley world.
"One of the issues we face is attracting and retaining high-caliber resources for internal audit," said Alan T. Ennis, Revlon CFO at the New York City ACI roundtable in November. "In the three years I've been [at Revlon], we've never reached full headcount."
According to The Evolving Role of the Internal Auditor -- Value Creation and Preservation from an Internal Audit Perspective, a recent KPMG white paper, the experience and skills that often are required for internal audit professionals include risk management, continuous auditing, fraud detection and prevention, information technology, foreign language, and strategic operational knowledge in areas such as supply chain, shared services and outsourcing.
"The [internal auditor] requirements are getting complex," Strandjord said. "Some people felt internal audit was spending too much on [Sarbanes-Oxley's] Section 404. But now I think it has been shifting toward value creation."
Career Path Heading in New Direction
Because of the shortage, many companies are sourcing auditors from third-party service providers while putting resources into the training and retention of talented internal audit professionals.
Charlie Peffer, audit committee chair for Olathe, Kan.-based global position satellite device maker Garmin, said the need to retain talented internal audit professionals has changed the typical internal auditor's career path.
"It used to be that the internal audit model was you would start [in internal audit department], learn a lot about the company and move into the operational end," he said at the Kansas City roundtable. "It has changed now.
"The internal audit positions have been elevated with the requirements of Sarbanes-Oxley and more attention to compliance."
He said that for those who choose a career in internal audit, there are many more career path opportunities than several years ago.
Coupled with the need for additional internal audit resources and skills, the changing role of internal audit requires audit committees' attention, says Edward F. Smith, ACI executive director.
"An important role for audit committees is to help ensure that, as the role of internal audit evolves, the company has the resources and skills -- either from within or external -- that are required to carry out internal audit's new responsibilities," Smith says. "And at the same time, internal audit remains focused on its primary mission -- internal controls assessment."
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