Do internal audit departments follow best practices?
A January audit by the excellent performance audit team in Louisiana’s legislative audit office found that shortages of dollars and management misunderstanding of internal audit functions are impairing the ability of the state’s 35 internal audit divisions.
Fifty-seven percent did not report to an audit committee, a recommendation of the Institute of Internal Auditors; 74 percent did not have a current quality assurance review, even though that’s required by professional standards and state law; 31 percent said management requests or mandated audits hindered their ability to prioritize audits based on risk-based criteria. In a survey response, one internal auditor told the legislative audit team: “Many agency heads do not understand the true role of Internal Audit. Internal auditors are often asked to conduct tasks that impair independence or prevent them from performing a true internal audit function.”
It was no surprise to us that the biggest challenge cited by internal auditors was their limited budgets. Many are very thinly staffed. In fact, the audit points out that half are one-person outfits.