Internal auditing is a profession that provides independent, objective assurance and consulting services designed to add value and improve an organization’s operations. As technology, regulations, and business practices continue to evolve rapidly, the role of internal auditors is becoming increasingly important for companies looking to manage risk and stay compliant.
But is there strong demand for internal auditors in today’s job market? Let’s take a closer look at some of the key factors affecting the need for these professionals.
The expanding regulatory environment
One of the main drivers of demand for internal auditors is the increasingly complex regulatory environment that companies must navigate. Following high-profile scandals and the financial crisis over the past couple decades, regulators have implemented stringent new requirements affecting financial reporting and compliance.
For example, laws such as Sarbanes-Oxley and Dodd-Frank have established strict new auditing and reporting rules for public companies. The financial services industry faces even more scrutiny under regulations like Basel III. Plus, industries from healthcare to education to manufacturing have seen a proliferation of new compliance requirements.
This expansion of the regulatory environment requires that companies build out their internal audit function to proactively identify and address areas of risk. According to one estimate, compliance spending by corporations increased over 50% from 2011 to 2015. And this spending has continued to rise steadily over the past several years.
The risks of technology and digital transformation
Another factor driving demand is that as companies adopt new technologies and digital business models, they take on new risks that must be managed. For example:
- Cloud computing creates risks around data security and access controls.
- Artificial intelligence and automation come with new ethical concerns around transparency and bias.
- Customer-facing technologies like e-commerce platforms introduce cybersecurity and privacy risks.
Internal auditors play a key role in evaluating technology controls and providing assurance around emerging digital risks. One survey found that more than 80 percent of CAEs expect increased focus on tech risks over the next few years.
Increasing scale and globalization
As businesses operate across borders and grow to massive scales, their complexity and risks multiply exponentially. Multinational organizations must navigate diverse regulatory, political, and cultural environments. Operating globally introduces financial, supply chain, and other operational risks.
Plus, large corporations are difficult to manage, with multiple business units, locations, and systems. This increased scale and complexity necessitates a strong internal audit function to connect the dots across the organization.
In fact, industry research shows that internal audit budgets tend to increase along with organization size and geographic footprint. Larger, global entities have broader assurance needs that generate greater demand for internal audit staffing.
Supporting sound corporate governance
Well-run companies recognize that an independent internal audit function is essential for sound governance and strategic decision making. The Institute of Internal Auditors describes internal auditing as the “cornerstone of good corporate governance.”
By providing unbiased evaluation of risks, controls, and procedures, internal auditing helps senior management and the board of directors fulfill their oversight responsibilities.
Moreover, internal audit insights can inform strategic planning by identifying holes in controls, emerging risk factors, and areas in need of new or updated policies and processes.
Forward-thinking executives understand the value internal auditors provide in enabling effective governance. And boards continue to expand their risk oversight role, driving further reliance on internal audit capabilities.
Coping with uncertainty and volatility
Today’s fast-changing business conditions also increase the need for internal audit’s independent perspectives. Ongoing economic, geopolitical, and technological disruptions make it harder than ever to predict risks and impacts.
In uncertain times, management depends even more on internal auditing to continually reevaluate threats and controls across the business. Nimble and proactive internal audit teams can provide vital insights to help management steer the company through turbulence.
Internal auditing provides “a disciplined approach and methodology that helps organizations adapt to changing business environments, improve business performance, and support growth,” says The Institute of Internal Auditors.
Preventing and detecting fraud
Unfortunately, major accounting scandals still occur all too frequently. From Theranos to Wirecard to Luckin Coffee and more, fraud remains a serious threat.
Internal audit plays a critical role in fraud prevention and detection. With their broad visibility and access across the organization, skilled internal auditors can identify suspicious patterns and activities that may indicate fraud and wrongdoing.
Companies recognize that a robust internal audit function provides a vital control in the fight against unethical behavior and criminal fraud within an organization.
Meeting investor expectations
Institutional investors, public pension funds, and other major shareholders keep a close eye on companies’ internal controls and risk management capabilities. Weak or ineffective internal auditing is seen as a red flag within the investment community.
Strong support for and staffing of internal audit activities signals to investors that an organization takes risk seriously. In fact, a company’s internal audit budget and scope are key criteria in ratings provided by audit firms and corporate governance watchdogs.
Management teams understand the need to devote sufficient resources to internal auditing in order to maintain investor confidence and satisfaction.
Fulfilling fiduciary duties
For organizations in heavily regulated industries like financial services, healthcare, transportation, and others, internal audit helps fulfill legal and fiduciary responsibilities around safety, information security, consumer protection, and more.
By providing assurance in high risk areas, internal auditors serve as frontline guardians against threats that could lead to legal, regulatory, or compliance failures.
Boards, executives, and business owners rely on internal auditors as an objective check to ensure they are satisfying their fiduciary obligations and maintaining necessary oversight.
Supporting ESG initiatives
As stakeholders pay increasing attention to environmental, social, and governance (ESG) issues, companies are prioritizing new ESG strategies, disclosures, and reporting. Internal auditors play an important role in this area too.
They can assess and provide assurance around companies’ identification and measurement of ESG impacts and metrics. For issues like climate risk, human rights, executive compensation, and board diversity that are heavily in focus, internal audit offers an independent perspective on stated policies, progress, and adherence to standards.
Many organizations are building up internal audit expertise in ESG as external pressures around sustainability continue to mount.
Driving operational excellence
Beyond managing risk, internal audit also provides vital support for overall performance improvement and cost optimization efforts. Through their ongoing reviews of business processes, systems, and controls, internal auditors gain unique insights across the organization.
These insights enable them to identify opportunities for greater efficiency, effectiveness, profitability, and quality. Internal audit provides recommendations not just for fixing internal control weaknesses, but for enhancing operational outputs and key performance indicators.
Executives rely on internal auditors as trusted advisors in continuous improvement and operational excellence programs. Auditors help management target impactful areas to drive cost savings and performance gains.
Delivering data analytics capabilities
The use of data analytics and audit technology is exploding within the profession. Modern internal audit groups possess cutting-edge data analysis skills and solutions.
These capabilities allow internal auditors to provide valuable business intelligence by analyzing operational data and identifying patterns, trends, outliers, and insights that management can act on. Data-driven internal auditors can unearth process weak spots, emerging risks, and performance improvement opportunities.
Many companies are building up analytics expertise within internal audit to leverage these advanced techniques and deliver enhanced business insights.
Supporting organizational change
Today’s fast-paced business environment requires organizations to undergo frequent change and transformation. When executing initiatives like mergers and acquisitions, ERP implementations, restructurings, digital transformation, and more, businesses rely on internal audit for support.
Internal auditors provide assurance around the controls, compliance, and risk management aspects of major organizational changes. Experienced auditors also lend their project management and consulting skills to drive successful execution of complex business transformations.
Companies undertaking substantial change look to expand their internal audit staff and capabilities during these critical periods.
Delivering flexible staffing
Professional internal audit groups offer businesses an adaptable resource that can expand, contract, and shift based on assurance needs. Many companies choose to insource or outsource internal audit work based on factors like cost, skills, and capacity at different points in time.
Unlike other in-house functions that perform ongoing operations, internal audit activities can scale up or down. Companies value internal audit as a flexible assurance function they can size according to changing risk landscapes and organizational requirements.
Becoming a strategic advisor
Leading-edge internal audit groups serve as trusted strategic advisors, not just objective assessors. They adopt a forward-looking mindset and position themselves as value-added partners to the business.
Strategic auditors focus less on checking boxes for historical compliance and more on evaluating emerging risks, advising on growth opportunities, and guiding strategic decision making.
Business leaders increasingly rely on expansive and strategic internal audit teams to provide recommendations that drive growth, innovation, and competitive advantage.
Enabling agility and resilience
In times of massive change and uncertainty, organizations must become agile and resilient to adapt quickly. Internal audit enhances organizational agility and resilience in the face of disruptions.
With their broad view across the business, internal auditors identify weak spots, risks, and process gaps that could inhibit responsiveness. They highlight areas where controls and procedures need improvement to enable agility.
Moreover, internal audit provides objective insights leaders need to steer through uncertainty and position the organization for resilience. Companies recognize the need for capable internal auditors that facilitate readiness for unexpected events.
Serving as a training ground
Internal audit continues to be viewed as an excellent training ground for developing future corporate leaders. The profession provides broad business exposure as auditors rotate throughout the organization.
High potential employees are often placed in internal audit as part of structured talent development programs. They gain experience with strategy, operations, compliance, project management, problem-solving, presentations, and influencing skills.
Leadership recognizes the value of internal audit as an in-house academy for honing skills needed by the managers of tomorrow.
Supply and demand dynamics
While demand drivers for internal auditors are plentiful, what about the supply side of the equation? Is there sufficient talent to meet rising needs?
Various data points indicate constrained supply amid growing demand for internal audit professionals:
- Unemployment rates for internal auditors tend to run below the national averages.
- Surveys show the vast majority of CAEs feel they need to expand their departments and struggle with talent shortages.
- Positions offer generous pay and benefits with high job satisfaction and ample career progression.
- New internal audit job postings continue to grow over 15% annually on top careers sites.
- Graduates of university internal audit programs achieve nearly 100% job placement.
While demand is booming, hiring and retaining top internal audit talent remains an immense challenge at many companies. This talent crunch seems poised to continue in the years ahead.
The bottom line
In today’s complex, rapidly evolving business environment, skilled internal auditors provide tremendous value and support to organizations. Leading companies recognize how mission critical internal audit expertise is for managing risk, maintaining compliance, driving improvements, and achieving strategic objectives.
Ongoing regulatory expansions, technology disruptions, global operating complexity, investor pressures, corporate governance needs, and business transformations all fuel rising demand for internal auditors across industries.
While securing and developing enough talent remains a pain point, dynamic internal audit teams deliver capabilities essential for organizational resilience and success. Smart investments in internal audit capabilities almost always pay dividends.
The bottom line is that for companies seeking to thrive in uncertain times, internal audit may be more indispensable than ever.
Conclusion
In summary, the demand for skilled internal auditors continues to grow driven by factors such as:
- Expanding regulations and compliance requirements
- New risks arising from technology adoption and digital transformation
- Increasing scale and complexity of global business operations
- Supporting sound corporate governance and strategic decision-making
- Navigating economic uncertainty and volatility
- Preventing and detecting fraud
- Meeting expectations from investors and shareholders
- Fulfilling legal, regulatory and fiduciary duties
- Assisting ESG, operational excellence and data analytics initiatives
- Providing flexible staffing model to meet assurance needs
- Serving as trusted strategic advisors to management
- Developing organizational agility and resilience
While securing sufficient internal audit talent remains challenging, leading organizations recognize the immense benefits and business value delivered by a robust internal audit function. Overall, current trends point to bright prospects for internal auditors looking to utilize their skills and experience to gain rewarding career opportunities.