Rising to new challenges: The view from the CAE office

Rising to new challenges: The view from the
office of the CAE
Grant Thornton 2012 CAE Survey

© Grant Thornton LLP. All rights reserved.

Overview

1. Survey summary
2. Use of technology
3. Emerging risks
4. Audit focus
5. Antifraud and risk management
6. Board relationships
7. Career path

© Grant Thornton. All rights reserved. 2

1. Survey summary

• Grant Thornton’s second annual survey of
approximately 300 chief audit executives (CAEs)
from U.S. institutions
• Chief audit executives are shifting their mindsets
from a compliance orientation to a more
progressive value enhancement orientation in
considering how to meet this charge and help their
organizations drive continued growth.

© Grant Thornton LLP. All rights reserved. 3

2. GRC technology usage slow to boot up

• Half of respondents disagreed with the statement
that their organizations effectively use GRC-
specific technology
• 79 percent said they were not using a GRC tool
• Respondents ranked cost of effort and time to
deploy, cost of seat license, and difficulty to
maintain and support as the top obstacles


2. GRC technology, cont.



• Data analytics still has a solid foothold in internal
audit with 64 percent of respondents using
• More efficient internal audit process is the top
reason for using data analytics
• Continuous auditing use is up; 42 percent of
respondents performing it to some degree, up from
one-third in last year’s survey


3. Emerging technology risks require attention

• More than one-third of respondents
acknowledged that cloud computing
represents a significant organizational
change and that they understand
the implications
• Although many CAEs have a raised awareness,
half of those surveyed said cloud computing is not
part of their audit plan


3. Emerging technology risks, cont.



• Other emerging risks of concern to CAEs, in order
of priority, include cybersecurity, mobile
technology, business interruption and social media
• 42 percent of respondents said they see the
greatest cybersecurity threat to their organization
coming from external hackers or other outside
parties


4. Audit focus

• Asked to rank the importance of their audit focus in
four key areas, financial risks ranked first, followed
by operational, compliance and strategic risks
• 42 percent of respondents have a portion of their
internal audit scope conducted outside the country,
up slightly from 2011
• If they perform global internal audit, most put
domestic internal audit professionals on airplanes


4. Audit focus, cont.

• Despite increasing attention by businesses to the
emerging economies of Brazil, Russia, India and
China (the BRIC countries), 44 percent do not
have an internal audit focus on these countries



• An overwhelming majority of respondents (97
percent) expect staffing to stay at the same level or
increase in the next 12 months, with one-quarter
expecting to add staff members
• Most respondents represented organizations with
10 or fewer audit professionals (75 percent), while
13 percent had between 11-25 staff members



• 63 percent of respondents have in-house audit
departments
• 34 percent have a co-sourcing arrangement, and
one-fifth expect their use of an internal audit
provider to increase in the next 12 months; 63
percent say it will stay the same
• The top reasons for outsourcing or co-sourcing
arrangements are subject matter expertise, staffing
and managerial support

5. Antifraud and risk management

• Conducting fraud investigations remains a
common internal audit activity, as cited by 76
percent of respondents
• Internal audit leads 36 percent of fraud
investigations
• More than three-quarters of CAEs said their
organizations have formal anti-fraud measures in
place


5. Antifraud and risk management, cont.



• Growing in importance is the monitoring of
intermediaries in foreign locations with respect to
anticorruption
– Respondents said their top tactics for managing
risks in this area include using compliance
monitoring, conducting due diligence and
performing an annual certification/background
check.



• Changes in the regulatory environment was ranked
as the number one risk to a company's governance
performance
• Most CAEs, 83 percent, do not think Sarbanes-
Oxley should be repealed


6. Board relationships

• A majority of CAEs (81 percent) surveyed noted that they
report functionally to the audit committee
• Asked to rank the value of specific
internal audit services from the
board’s perspective, CAEs placed
risk monitoring and separate
evaluation as the highest


6. Board relationships, cont.


6. Board relationships, cont.

• 60 percent of CAEs said they take issues to the audit
committee that run counter to management’s view, which is
up 8 percent from last year’s results
• Internal audit takes an active role in setting the agenda for
the audit committee, a task 81 percent of respondents said
they perform
• 76 percent said internal audit does not conduct training for
the audit committee


7. CAE careers

• Although many CAEs view
their post as a final destination
on their career path, 56 percent
said they see internal audit as a
grooming place for future
leadership roles elsewhere
in their organizations
• 32 percent were neutral on whether internal audit is a
grooming place and 12 percent disagreed with this
assertion altogether


7. CAE careers, cont.


7. CAE careers, cont.

• 40 percent see their next career step being an
executive management position within their
company or another organization
• 26 percent indicated that they
expect their next career step
to be another CAE role


Summary

With the recession behind them for the most part,
and promising economic signs emerging,
organizational demands are pulling internal audit in
new directions. CAEs strive to balance competing
goals and initiatives, while cultivating areas of
opportunity.


Questions


For more information

Visit www.grantthornton.com/CAESurvey

Download the PDF
Sign up to receive future articles
Participate in 2013 survey


Contact

Warren Stippich
Partner and National Governance, Risk and
Compliance Solution Leader
T 312.602.8499
E warren.stippich@us.gt.com


Rising to new challenges: The view from the CAE office

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