8% rise in FI senior managers responsible for internal audit
Internal audit professionals provide a crucial function within financial institutions (FIs) by offering assurance that risk management and compliance departments are adequately performing their roles.
Organisations across the country have been placing more emphasis on optimising internal audit, which is resulting in a growing number of senior managers taking responsibility for these processes.
New figures from the Chartered Institute of Internal Auditors (IIA) have revealed an eight per cent increase in senior managers who are directly overseeing these functions in UK FIs.
The research, which covers the year-long period between June 2016 and June 2017, suggested businesses are taking a much stronger stance on non-financial and financial risk.
According to the IIA, 155 individuals are now tasked with internal audit management and oversight within the Senior Managers’ Regime (SMR) – up from 143 in 2016.
Internal audit focus on the rise
The news comes as the number of overall staff who have a prescribed responsibility under the SMR dropped from 3,159 to 3,111.
“Banks and other financial institutions are upping the ante in ensuring that internal audit provides an effective line of defence against risk,” said IIA chief executive Dr Ian Peters.
“By raising it up the agenda at a senior level, regulators are demonstrating that they recognise the vital role internal audit plays as an independent internal watchdog.”
Dr Peters added that linking personal responsibility to internal audit functions, particularly at the top-tier leadership level, sends a strong message that assurance is a vital part of the corporate governance process.
His comments followed the IIA’s announced reforms to the Guidance on Effective Internal Audit in Financial Services – more commonly referred to as the Financial Services Code.
Last month, we explored the new recommendations outlined in the code, which include checking the objectivity and independence of chief internal auditors every year after they’ve been with an organisation for seven years.
The IIA said organisations should also produce annual reports regarding their company’s adherence to risk appetite frameworks, as well as emphasise the importance of internal audit overall within the enterprise’s culture.
“The original code made a real difference to the authority of internal audit since it was first published in 2013,” said Dr Peters.
“This updated edition will provide an invaluable framework to help inform and strengthen the process, to ensure that organisations’ risk management controls are robust and fit for purpose.”
Are internal audit skills becoming more valuable?
It may be too soon to tell what impact, if any, the new code will have on internal audit recruitment.
However, increasing the emphasis placed on the function’s importance is likely to encourage businesses to seek out skilled professionals capable of adhering to any new regulations and recommendations.
Recent research from Barclay Simpson revealed that internal auditors are becoming more confident that employers value their skills. While 61 per cent said organisations appreciated their talents in 2016, this figure climbed to 68 per cent this year.
This trend was even more notable among interim contractors. Only 38 per cent felt valued in 2016, but 53 per cent reported employer confidence in their skills in 2017.
Nevertheless, our research highlighted growing dissatisfaction with remuneration among auditors. Nearly 40 per cent of professionals said salary was the factor they’d most like to change about their jobs – up from 28 per cent last year.
Switching jobs brings a 17 per cent pay rise on average, whereas remaining with an existing company saw auditors gain just a five per cent increase.
These trends could potentially spell an exodus of talent from many organisations if employers fail to assess their remuneration packages and retention policies, particularly as demand rises for high-quality candidates.
Our 2017 Compensation and Market Trends Report combines our review of the prevailing conditions in the internal audit recruitment market together with the results of our latest employer survey.