AuditNet® Survey
At what revenue base, do public companies typically consider having an Internal Audit function?
We are trying to benchmark when companies formerly establish an audit function. Prior to Sarbanes-Oxley, I would guess many smaller companies did not have an audit function unless mandated by the stock exchange for example, the NYSE. However, Sarbanes-Oxley changed everything whether or not you were classified as a large accelerator, accelerator or non-accelerator filer because many companies established an audit function or outsourced SOX completely (which is auditing - just not classified as internal audit). Anyway, the questions really are at what revenue base do companies consider establishing a formal internal audit function? If you have an audit function, what role does IA play in the SOX world?
Survey Results
A total of 153 auditors from 10 industry sectors responded to the survey. Almost half of the respondents indicated that their internal audit department was less than 5 years old. Almost two thirds of the departments had 5 or fewer auditors. Over one third were required to report under Sarbanes-Oxley and of those that do approximately 90% handle the function in-house. Almost 37 per cent of those responding did not have an internal audit function before Sarbanes-Oxley. Almost two thirds of the respondents indicated that their audit department was created for “good business practice”. More than three quarters of the respondents indicated online resources/tools would help them meet their audit needs. It is clear from the responses that Sarbanes-Oxley has had an impact on the creation of audit departments but most organizations did so because it was the right thing to do. The fact that many of the audit departments were relatively new (less than 5 years old) and small (less than 5 auditors) would support both premises of the impact of Sarbanes-Oxley and developing audit functions. These auditors are clearly interested in the types of online resources offered by sites such as AuditNet, Protiviti KnowledgeLeader, Accounting Research Manager, and Thomson e-Tools for Internal Auditors. The complete results of this AuditNet® survey are now available.
.
Company Total Revenues
|
Less than $75 Million |
32.4% |
|
$75-100 Million |
7.4% |
|
$100-500 Million |
20.9% |
|
More than $500 Million |
39.2% |
How long has your audit function existed?
|
Less than one year |
17.0% |
|
1-5 years |
32.7% |
|
6-10 years |
15.6% |
|
Longer than 10 years |
35.4% |
What is the size of your audit department?
|
I am a one person shop |
21.6% |
|
2-5 professionals |
41.2% |
|
6-10 professionals |
14.2% |
|
11-25 professionals |
11.5% |
|
26-50 professionals |
5.4% |
|
More than 50 professionals |
6.1% |
Does your organization have to comply with Sarbanes-Oxley reporting requirements?
|
Yes |
37.1% |
|
No |
62.9% |
Does your organization outsource your SOX compliance function?
|
Yes |
10.4% |
|
No |
38.9% |
|
N/A |
50.7% |
Did your organization have an internal audit function before Sarbanes-Oxley?
|
Yes |
63.4% |
|
No |
36.6% |
Why did your organization establish an internal audit function?
|
SOX |
13.3% |
|
Other Regulatory Compliance |
38.5% |
|
Good Business Practice |
66.4% |
What type of SOX filer is your organization?
|
Large Accelerator |
10.8% |
|
Accelerator |
13.7% |
|
Non-Accelerator |
15.1% |
|
N/A |
61.9% |
Does your audit function have a role in the Sarbanes-Oxley review process?
|
Yes |
35.7% |
|
No |
22.1% |
|
N/A |
42.1% |
If so what role does your internal audit function play in the Sarbanes-Oxley process?
|
Project Leader |
39.7% |
|
Project Team Participant |
17.8% |
|
Process Review |
57.5% |
What types of online resources/tools would help you meet your audit needs?
|
Methodology Templates (a process) |
62.0% |
|
Audit work programs, questionnaires and control matrices |
75.2% |
|
Working paper examples |
54.0% |
|
Report examples |
48.9% |