According to the survey, the involvement of audit committees in overseeing the audit function, as well as in the implementation of audit recommendations, needs to undergo a significant change. However, despite current economic realities, the survey shows that almost 48% of the companies confirmed that their internal audit budgets have increased. Survey findings showcase that while 78% of the companies confirmed that the audit committee approves the scope of the audit plan, only about a half or 53% affirmed that it is involved in monitoring the resolution of audit issues and the implementation of recommendations.
Leading practices now suggest that the head of internal audit should report to the audit committee functionally. Survey findings indicate that the Head of Internal Audit reports to the audit committee in less than half of the companies (44%) surveyed, and a significant 57% report to the CEO or the CFO instead. While 90% of the companies that responded confirmed that their internal audit function does interact with their statutory audit and other internal risk management functions, a significant number of organisations do not have a structured schedule for internal and external audit to liaise with each other. Less than 30% of the companies affirmed that their audit committees meet their internal auditors at every audit committee meeting.
In the survey, 51% of the companies stated that a fraud risk assessment was not taken into account while creating their audit plan and 44% confirmed that fraud-detection procedures are not included in the work plan for most audits.
An area of concern, however, is that despite the increasing dependence of organizations on IT systems in todays world, over a third or 36% of the companies indicated that an IT risk assessment is not taken into account while creating their audit plan.
Business risk services, Ernst & Young partner & national director Ram Sarvepalli stated, The audit committee is one of the key pillars of corporate governance and the oversight it provides is an important driver in the preservation of shareholder value. And a consistent and high quality audit work is a driving factor for internal audit to be seen as a value-adding function within organisations.