STRONG FOUNDATIONS A Pulse of Internal Audit Supplemental Report

Pulse of Internal Audit: Strong Foundations

About the Pulse of Internal Audit

RESPONDENT DEMOGRAPHICS

Internal Audit Position Industry Groupings *

Organization Type Internal Audit Function Size (FTEs)

*Industry groupings were defined as follows: Industrial — manufacturing; construction; utilities; mining, quarrying, and oil and gas extraction; transportation and warehousing; waste management/remediation services. Services — health care; retail trade; real estate; accommodation and food; wholesale trade; entertainment; information; professional; agriculture. Government and education — public administration and educational services. Finance and insurance — financial institutions, insurance, asset management, broker-dealers.

86%

14%CAE

Director/seniormanager

43%

22% 21%

14%

Publicly traded Public sector Private sector Nonprofit

27%33%

24%

10%6%

1 to 3 4 to 9 10 to 24 25 to 49 50 or more

28%

28%

24%

20%

Finance andinsurance

Services

Industrial

Government andeducation

Number of Responses

CAEs 460

Director/senior managers

78

Total 538

www.theiia.org/pulse 3

Contents

Introduction ....................................................................................................................................................... 4

Section 1: The Cornerstones of a Strong Foundation ..................................................................................... 5

Resources ................................................................................................................................................... 5

Competence ............................................................................................................................................... 6

Structure ..................................................................................................................................................... 8

The International Standards for the Professional Practice of Internal Auditing ..................................... 9

Section 2: Other Mandatory Guidance .......................................................................................................... 10

Definition of Internal Auditing ................................................................................................................ 10

Code of Ethics .......................................................................................................................................... 10

The Core Principles for the Professional Practice of Internal Auditing ................................................. 11

Section 3: Delivering World-class Internal Auditing ...................................................................................... 12

Conclusion ....................................................................................................................................................... 14

The International Professional Practices Framework .................................................................................... 15

Appendix .......................................................................................................................................................... 16

Notes ................................................................................................................................................................ 18

ABOUT THE AUDIT EXECUTIVE CENTER

DISCLAIMER

COPYRIGHT

4 Pulse of Internal Audit: Strong Foundations

NOTE TO THE READER

INTERNAL AUDIT

ACTIVITY

Introduction

enough

www.theiia.org/pulse 5

STANDARD

APPLYING THE

STANDARDS

Section 1: The Cornerstones of a

Strong Foundation

RESOURCES

STAFFING

6 Pulse of Internal Audit: Strong Foundations

PROFICIENCY

BUDGET

COMPETENCE

www.theiia.org/pulse 7

SUPPLEMENTAL

GUIDANCE

DEMONSTRATING

COMPETENCE

EXHIBIT 1: GLOBAL INTERNAL AUDIT COMPETENCY FRAMEWORK

Source: The IIA’s Global Internal Audit Competency Framework, available at

www.theiia.org. ©2013 Institute of Internal Auditors, Inc.

TRAINING

AUDIT SKILLS

Improvement and Innovation

Internal Audit Delivery

Personal Skills

Communication Persuasion and

Collaboration Critical Thinking

Technical Expertise

IPPF Governance, Risk,

and Control Business Acumen

Internal Audit Management

Professional Ethics

8 Pulse of Internal Audit: Strong Foundations

REPORTING LINES

THE “BOARD”

STRUCTURE

www.theiia.org/pulse 9

INDEPENDENCE THE INTERNATIONAL STANDARDS FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING

INDEPENDENCE AND OBJECTIVITY

10 Pulse of Internal Audit: Strong Foundations

IPPF Section 2: Other Mandatory

Guidance

DEFINITION OF INTERNAL AUDITING

CODE OF ETHICS

www.theiia.org/pulse 11

MISSION OF INTERNAL

AUDIT

THE CORE PRINCIPLES FOR THE PROFESSIONAL PRACTICE OF INTERNAL AUDITING

.

CORE PRINCIPLES

12 Pulse of Internal Audit: Strong Foundations

IIA QUALITY SERVICES Section 3: Delivering World-class

Internal Auditing

www.theiia.org/pulse 13

14 Pulse of Internal Audit: Strong Foundations

RESOURCES Conclusion

www.theiia.org/pulse 15

The International Professional Practices Framework

All elements of the IPPF, including Implementation Guidance

and Supplemental Guidance, are free to IIA members.

16 Pulse of Internal Audit: Strong Foundations

Appendix Exhibit A: Internal Audit FTE Employees by Organization Type

Note: Q35: Approximately how many full-time equivalent employees make up your internal audit department? CAEs

and directors, North America. n = 520.

Exhibit B: Internal Audit Activities with Budget Increases or Decreases by Sector

Note: Q38: Looking back over the past 12 months, did the budget of your internal audit function increase, stay the

same, or decrease? CAEs and directors, North America. n = 512.

37%

36%

31%

27%

15%

26%

34%

38%

30%

29%

36%

33%

22%

14%

35%

23%

28%

25%

7%

12%

4%

21%

21%

16%

Public sector

Privately held

Nonprofit

Financial services

Publicly traded

All respondents

1 to 3 4 to 9 10 to 24 25 or more

49%47%

37%35%

24%

40%

12%

8%

20%

13% 14% 14%

Financial services Nonprofit Publicly traded Public sector Privately held All respondents

Increased budget in 2016 Decreased budget in 2016

www.theiia.org/pulse 17

Appendix (continued)

Exhibit C: Methods of Training for Internal Auditors

Note: Q42: What methods of external training do you plan to use for each level of internal audit staff? (Select all that

apply.) CAEs and directors, North America. n = 535.

Exhibit D: Functional and Administrative Reporting Lines

Note: Q33: What is the primary administrative reporting line for the chief audit executive (CAE) or head of internal audit in your

organization? Q34: What is the primary functional reporting line for the chief audit executive (CAE) or head of internal audit in your

organization? CAEs and directors, North America. n = 520.

87%

50%45%

67%

49%

41%

60% 61%

50%

Conferences In-house training On-demand courses

Director Manager Staff

88%

6%

5%

33%

4%

39%

3%

18% 4%

Functional

Administrative

Board, audit committee CEO, president, agency head CFO, vice president of finance Other chief officers Other

18 Pulse of Internal Audit: Strong Foundations

Notes

GLOBAL HEADQUARTERS

1035 Greenwood Blvd., Suite 401

Lake Mary, FL 32746

www.globaliia.org

2017-0551