Economic uncertainty still seen as the biggest risk in 2012: PwC internal audit report
TORONTO, April, 2012— According to PwC’s 2012 State of the internal audit profession study, nearly three-quarters of the 1,530 chief audit executives and stakeholders surveyed cited global economic uncertainty as the biggest risk to companies in 2012. The new report examines the rising importance of risk management and the increasing expectations of internal audits’ contribution to the effort.
Other top issues on the minds of chief auditors include fraud and ethics, M&A, large programs, new product introductions, and business continuity.
“Executives are increasingly concerned about the complexity, unpredictability and variety of risks,” says Matthew Wetmore, national internal audit leader of PwC which provides industry focused assurance, advisory and tax services to public, private and government clients. “Businesses are calling for their internal auditors to broaden and deepen their skills to deal with a range of risks, including data privacy and security, regulation and government policies.”
Less than half of respondents (45%) said they are comfortable with how well their most critical risks are being managed. Indeed, 45% of the respondents indicated they don’t create their audit plans using a robust, top-down risk assessment strategy.
“To be effective, organizations needs to encourage a culture where stakeholders and chief audit executives have a dialogue around enterprise risks, share their perspectives, and reach a common view on the role of internal audit concerning the most critical risks,” says Wetmore. “This includes comprehensive, top-down risk assessments where the entire enterprise risk management process is taken into consideration.”
Wetmore says, “Instead of just asking what might go wrong, internal auditors should think about what needs to go right to make sure systems, processes and management focus are aligned to achieve the company’s goals.”
Seventy-eight percent of the survey respondents whose company were better managing risk say their CAEs have a more active role in executive meetings. “Companies that are proactive are better able to understand and manage their risks, protect themselves by building financial buffers, and can actively and effectively respond to risk.”
To download a full copy of the report, visit www.pwc.com/ca/iastudy.
The 2012 State of the internal audit profession survey was conducted in the fourth quarter of 2011 and the first quarter of 2012 and includes more than 1,530 respondents in 16 separate industry sectors from 64 countries across the globe. This year, for the first time, in addition to surveying internal auditors about the state or the profession, PwC surveyed the profession from the outside in, asking CFOs, audit committee directors, CEOs, and other stakeholders to share their views on internal audit's role in the organization and its capabilities for supporting the risk management activities of the company.