Ten signs your internal audit is in trouble

The internal audit continues to morph. The pressure is high, not only from Sarbanes-Oxley but also from the punishing forces that financial executives are grappling with. The recession has raised the stakes for a lot of companies. With more "going concern" doubts being forced, the internal audit is as crucial as ever. Frankly, careers are on the line. 

So how do you know if an internal audit is veering off track. Richard Chambers, president of the Institute of Internal Auditors, argues that "the most common strategic mistake that CAEs [chief audit executives] make is failing to maintain ongoing alignment with the needs and expectations of their key stakeholders (typically the audit committee, chief executive officer (CEO), and chief financial officer (CFO) in the corporate sector)." 

Fortunately, he also offers 10 signs that trouble is brewing for the chief audit executive: 

1. You are executing an annual audit plan developed from a risk assessment conducted six months ago, and no new audits have been added in the past two months.
2. You increasingly find yourself arguing with stakeholders about why internal auditing should not be addressing specific new or emerging risks.
3. The audit committee is surfacing more new risks to you than you are to it.
4. Audit committee members are citing best practices they have observed in other companies with increasing frequency.
5. Your CEO, CFO, or audit committee chair are citing internal audit thought leadership that you have not heard about.
6. You are getting a lot of pressure from your stakeholders to undergo an external quality assessment. An external quality assessment is a great idea and mandated by the Standards--but it should be your idea and not theirs.
7. Your budget/staffing is being reduced, and you are not even being asked about the impact.
8. You find yourself on the audit committee agenda with less and less frequency.  
9. You are getting fewer and fewer phone calls and e-mails from key stakeholders.
10. You discover that one of your peers in the CFO organization has just joined The IIA.  

So what to do? Get back in the loop as fast as you can. - Jim