66% of internal audit teams say capabilities don’t align with priorities due to skills gap
Sept. 4, 2024
Outsourcing and internal collaboration have skyrocketed as organizations’ demands and goals outpace their audit teams, according to new Jefferson Wells data.
Having a strong internal audit process within an organization is pivotal for not only growth but also the deterrence of those within the organization who are either bad actors or have sticky fingers.
But as goals involve growth, expansion and digital transformations, things like risk, assessment of financial controls, compliance and cybersecurity — all responsibilities of internal audit teams — may be falling by the wayside due to talent shortages.
According to new data from Jefferson Wells’ 2024 Internal Audit Priorities survey, internal auditors say they are unable to keep up with their organization’s growth goals. More than two-thirds (66%) of internal audit teams say their capabilities do not fully align with their organization’s priorities.
Calling in reinforcements
With a large portion of CFOs already outsourcing many of their accounting functions, it’s no surprise that internal auditors have seen a stark rise in organizations using external support to supplement areas where their labor or technology can’t get the job done alone.
Nearly three-quarters (74%) of internal audit leaders say they’re now using external support to meet demands. That’s up 54% from 2023. It’s worth noting that the trend before 2023 was declining slightly year-over-year, down approximately 2% in 2022 and 6% in 2023.
Supplementing talent YoY
Outsourcing and internal collaboration have risen tremendously, all while modification or deferment of audits have gone down.
Internal collaboration across the business is also up approximately 82%, from 22% in 2023 to nearly 40% of internal auditors saying they rely on the business if added capabilities are required to meet their demands. This type of collaboration not only helps familiarize different areas of the finance team while providing cross-functional benefits but may also drive costs down by not having to utilize external help.
For CFOs, researchers suggest these types of collaboration efforts are critical to overcoming internal audit challenges. “CFOs should work closely with their heads of internal audit to ensure these significant risks are assessed and adequately mitigated within their organizations,” Timothy Lietz, Jefferson Wells’ national practice leader of risk and compliance, told CFO.com.
“Additionally, our survey results indicate that the talent market remains very challenging, skills in cybersecurity, data analytics, IT audit and generative AI are most difficult to train and retain,” said Lietz.
Cybersecurity and preparing for regulation
The new SEC cybersecurity disclosure rule wasn’t an issue for most organizations that already concluded the process. Sixty percent said they did so without issue. Less than a fifth (15%) said they had issues, and a quarter (25%) said they hadn’t done anything to adhere to the new rules yet.
Internal auditing's declining role in countering ransomware
Despite its rise in occurrence and costs, most internal auditors have decreased their focus on ransomware prevention efforts.
Despite new regulations, internal auditors report working less in all areas around ransomware research and training since last year. This is not only an area that can create large costs and workloads for an internal audit team after the fact, but it’s up 64%, according to researchers at Jefferson Wells.
Generative AI’s role
Generative AI’s use within internal auditing has risen dramatically over the last year. The 2023 report indicated that nearly two-thirds (63%) of respondents didn’t use any generative AI in their functions at that time. In the report this time around, that figure is down to less than a quarter (23%).
Internal auditors and their organizations are completely torn about generative AI’s function in their work. Almost to the exact quarter, the four areas surveyors offered as options to provide a take on their generative AI standards and roles were split.
Internal audit's generative AI approach
Where exactly they’re using generative AI tools is also split, but most are using it in planning and repetitive tasks. Nearly a third are using it in audit planning (32%) and brainstorming/summary (31%). Nearly a quarter say they’re using it in reporting (23%), auditing (22%) and audit scope (22%). A fifth (20%) say they’re using it for data processing.
[CFO.com]
