Strategically leveraging compliance activities: 2014 CAE Survey results
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The 2014 CAE survey indicates that U.S. Chief Audit Executives (CAEs) are struggling to balance rising compliance demands with the need to focus on higher value activities, leading to significant resource constraints. While 77% of CAEs see opportunities to add value outside regulatory compliance, many report that compliance risks overshadow strategic risks. To enhance internal audit efficiency, CAEs are encouraged to leverage technology, adopt a one-to-many testing approach, and invest in talent development.
Strategically leveraging compliance activities: 2014 CAE Survey results
- 1. © 2014 Grant Thornton LLP. All rights reserved. Strategically leveraging compliance activities 2014 CAE SURVEY RESULTS
- 2. © 2014 Grant Thornton LLP. All rights reserved. 2 Grant Thornton LLP surveyed more than 400 U.S. chief audit executives (CAEs)… Results = CAEs are reprioritizing risk and making difficult resource decisions due to rising compliance requirements
- 3. © 2014 Grant Thornton LLP. All rights reserved. Compliance vs. adding value
- 4. © 2014 Grant Thornton LLP. All rights reserved. 4 36% of CAEs say they are unable to devote resources to higher value activities due to focus on regulatory compliance
- 5. © 2014 Grant Thornton LLP. All rights reserved. 5 77% of CAEs chose identifying improvement opportunities as t he t op area w here int ernal audit organizat ions could add value if not for t he const raint s of com pliance requirem ent s
- 6. © 2014 Grant Thornton LLP. All rights reserved. 6 Survey Finds: COST is the biggest impact of regulation
- 7. © 2014 Grant Thornton LLP. All rights reserved. 7 Due to heavy focus on regulatory compliance activities, 53% of CAEs indicate reduction in focus on core internal audit areas such as mitigating risk & stronger corporate governance
- 8. © 2014 Grant Thornton LLP. All rights reserved. 8 The way forward means fullyutilizingexisting resources asacriticalpieceof maximizinginternal auditefficiency andimpact
- 9. © 2014 Grant Thornton LLP. All rights reserved. Effectively leveraging technology and data analytics
- 10. © 2014 Grant Thornton LLP. All rights reserved. 10 CAEs slow to adopt internal audit tech, likely due to reluctance to use additional scarce resources Only 29% of CAEs even use GRC/ internal audit specific tech
- 11. © 2014 Grant Thornton LLP. All rights reserved. 11 CAEs that use technology resources are able to leverage them across multiple functions
- 12. © 2014 Grant Thornton LLP. All rights reserved. 12 60% of CAEs reported using data analytics to enhance the internal audit function
- 13. © 2014 Grant Thornton LLP. All rights reserved. 13 Where data analytics is used the most Performance measurement Forensic analysis Predictive analysis
- 14. © 2014 Grant Thornton LLP. All rights reserved. 14 Topbenefitsderived
- 15. © 2014 Grant Thornton LLP. All rights reserved. One-to-many approach
- 16. © 2014 Grant Thornton LLP. All rights reserved. 16 Internal audit needs a new approach to compliance Compliance requirements continue to rise: Dodd Frank Affordable Care Act PCI DSS Anti-corruption regulations Government contract requirements
- 17. © 2014 Grant Thornton LLP. All rights reserved. 17 69% of CAEs listed increased cost as the top impact of regulation on their organization …36% of CAEs say they are unable to devote resources to higher-value activities due to the focus on regulatory compliance
- 18. © 2014 Grant Thornton LLP. All rights reserved. 18 Compliance risk ranks #1 ahead of strategic risk
- 19. © 2014 Grant Thornton LLP. All rights reserved. 19 What is the one-to-many approach? Leverage control testing across multiple compliance areas Test once to comply multiple times with various standards CAEs may be able to lessen the compliance burden by satisfying requirements in a more efficient and economical way
- 20. © 2014 Grant Thornton LLP. All rights reserved. 20 …Only 54% found ways to implement the approach 92% of CAEs believe they can potentially apply one-to-many principles for to up to 50% of their control testing
- 21. © 2014 Grant Thornton LLP. All rights reserved. 21 Killing two or more birds with one stone is a clear path to efficiency gains, although not an easy one Many CAEs believe that they must silo control testing for accuracy
- 22. © 2014 Grant Thornton LLP. All rights reserved. T h e T A L E N T g a p
- 23. © 2014 Grant Thornton LLP. All rights reserved. 23 Talent plays a significant role within internal audit—ensuring compliance & delivering value 40% of CAEs view “talent quality or capacity” as a barrier to delivering greater value to their orgs
- 24. © 2014 Grant Thornton LLP. All rights reserved. 24 CAEs rank building talent and skills #3 in their goals for the next 12 months (above ensuring compliance for key regulations)
- 25. © 2014 Grant Thornton LLP. All rights reserved. 25 Internal auditors are expected to have a wide range of skills, but needs may be so specialized that it makes sense to consider alternatives: Learning programs administered internally or externally
- 26. © 2014 Grant Thornton LLP. All rights reserved. 26 Bringing subject matter experts from other parts of the business for operational and strategic projects
- 27. © 2014 Grant Thornton LLP. All rights reserved. 27 Co-sourcing with an outside professional services firm
- 28. © 2014 Grant Thornton LLP. All rights reserved. 28 Setting up a special projects budget for consulting services
- 29. © 2014 Grant Thornton LLP. All rights reserved. Putting it all together
- 30. © 2014 Grant Thornton LLP. All rights reserved. 30 To create value out of compliance activities, CAEs can leverage technology and data analytics optimize their compliance activities hire the right talent
- 31. © 2014 Grant Thornton LLP. All rights reserved. 31 Warren Stippich Partner and National Governance, Risk and Compliance Practice Leader Warren.Stippich@us.gt.com Bailey Jordan Partner and Southeast Region Governance, Risk and Compliance Practice Leader Bailey.Jordan@us.gt.com Contact us Want to learn more about strategically leveraging compliance activities? Teri Suzuki Principal and Northeast Region Governance, Risk and Compliance Practice Leader Teri.Suzuki@us.gt.com Priya Sarjoo Managing Director and Central Region Governance, Risk and Compliance Practice Leader Priya.Sarjoo@us.gt.com Shawn Stewart Partner and West Region Governance, Risk and Compliance Practice Leader Shawn.Stewart@us.gt.com