Nearly One in Four Companies Has Achieved Rebalancing - More than Twice
Number of Organizations Compared to 2005 Study
MENLO PARK, Calif., Nov. 6 /CNW/ -- For the first time since the U.S.
Sarbanes-Oxley Act went into effect in 2002, a growing number of internal
audit departments are returning to business as usual, according to a new
survey by Protiviti Inc. Having been consumed with Sarbanes-Oxley compliance
projects for the past four years, 24 percent of companies report their
internal audit departments have achieved "rebalancing" -- a renewed focus on
their traditional responsibilities that is balanced with compliance
activities. This number is more than double the response (10 percent) from a
similar survey conducted in 2005 by Protiviti, a leading global provider of
internal audit and risk consulting services.
The results of Protiviti's second Internal Audit Rebalancing study are
detailed in its report, "Moving Internal Audit Back Into Balance." The survey
was conducted from October 2006 through January 2007, when the first wave of
companies reached Year Three of Sarbanes-Oxley compliance.
"This process of rebalancing is tied closely to the development of a more
efficient and sustainable approach to compliance, which is why it takes time
to achieve," said Bob Hirth, managing director for Protiviti and head of the
company's global internal audit practice. "However, as the results of our
second rebalancing survey indicate, significant progress has been made.
Companies clearly are seeing the long-term benefits of rebalancing, which
include ensuring they do not focus solely on financial reporting at the
expense of other critical business operations and functions.
"At the same time," Hirth noted "as a result of Sarbanes-Oxley, there is
definitely more financial reporting control-related auditing being conducted,
and there is a heightened focus on IT auditing, both of which are positive
outcomes of the legislation."
Among the key findings of Protiviti's Internal Audit Rebalancing survey:
-- Internal auditors see new benefits in rebalancing. Nearly half of
internal auditors polled -- 47 percent -- cited "being able to perform
more traditional audits" as the top benefit derived from rebalancing.
This was greater than the combined response for the next three
benefits, including "more appropriate coverage of risk," which was the
top-ranked benefit in the previous survey. Hirth noted, "This is a
strong indicator that after more than three years of Sarbanes-Oxley
compliance, internal auditors are ready for -- and recognize a need for
-- the internal audit function to get back to basics."
Examples of more traditional auditing, according to Hirth, include
assisting management and the audit committee in identifying key
enterprise-wide business risks, reviewing potential indicators of
fraud, and completing focused audits in high-risk areas. Some of these
high-risk areas include: IT security; business continuity; revenue
processes; remote locations; capital construction and other significant
compliance areas, exclusive of Sarbanes-Oxley.
-- Year Three is a turning point for many internal audit departments. A
large majority of organizations that have achieved rebalancing -- 80
percent -- are in Year Three of Sarbanes-Oxley compliance.
"Perspective is everything," Hirth notes. "By the third year,
organizations have a better understanding of what does and does not
work with their Sarbanes-Oxley compliance efforts, and internal
auditors have adapted to increased workloads and responsibilities. They
have a deeper understanding of the regulations and view compliance as a
long-term process instead of a short-term project."
-- Rebalancing gains momentum quickly. Once they initiated efforts, 45
percent of companies took about one year to achieve rebalancing, while
28 percent required less than one year.
-- Rebalancing strategies continue to evolve. The three rebalancing
strategies most widely employed among internal audit departments are:
reducing the total population of controls (45 percent), reducing the
number of key controls (37 percent), and increasing reliance on
internal audit by external auditors (34 percent). However, when
assessing strategies that are planned for rebalancing, the survey
results suggest "greater reliance on internal auditing by external
auditors" will be the most popular approach in the coming years.
-- Internal audit departments are demonstrating resilience and creativity
in their approach to rebalancing. Most often, internal audit
departments are rescoping their workload (59 percent), increasing
ownership by process owners (55 percent) and reallocating resources (52
percent). Compared to the previous survey, noticeably fewer are
rebalancing without adding resources.
-- Internal auditors have kept it in-house. A majority of organizations
made limited use of external assistance in their rebalancing efforts
(43 percent), while some used none at all (27 percent). In most cases,
outside consultants were relied upon by some organizations until
additional internal audit professionals were hired. Others leveraged
external assistance to lead the initial process design, and only during
Protiviti conducted its Internal Audit Rebalancing Survey at The
Institute of Internal Auditors' "All Star Conference" in fall 2006, where
attendees were provided the opportunity to complete the 23-question poll. The
company also invited members of KnowledgeLeader, its subscription-based
internal audit and risk management portal, to participate in the study.
Lastly, Protiviti surveyed numerous financial and audit executives nationwide
who expressed interest in providing their perspectives on the topic of
rebalancing internal audit priorities. More than 90 percent of respondents
hold managerial positions, many at the level of chief audit executive,
internal audit director or general auditor.
To obtain a complimentary copy of "Moving Internal Audit Back into
Balance," please visit http://www.protiviti.com or call 888.556.7420.
About Protiviti Inc.
Protiviti (http://www.protiviti.com) is a leading provider of independent
risk consulting and internal audit services. The company provides consulting
and advisory services to help clients identify, assess, measure and manage
financial, operational and technology-related risks encountered in their
industries, and assists in the implementation of the processes and controls to
enable their continued monitoring. Protiviti also offers a full spectrum of
internal audit services to assist management and directors with their internal
audit functions, including full outsourcing, co-sourcing, technology and tool
implementation, and quality assessment and readiness reviews.
Protiviti, which has 60 locations in the Americas, Asia-Pacific and
Europe, is a wholly owned subsidiary of Robert Half International Inc. (NYSE
symbol: RHI). Founded in 1948, Robert Half International is a member of the
S&P 500 index.
Protiviti is not licensed or registered as a public accounting firm and
does not issue opinions on financial statements or offer attestation services.
For further information:
For further information: Kevin Donahue, +1-650-234-6385,
firstname.lastname@example.org, or Kathy Keller, +1-650-234-6252,
email@example.com, both of Protiviti Inc. Web Site: