The Great Resignation and its Impact on Internal Audit

According to the U.S. government’s jobs report released earlier this month, over 20 million people left their jobs in the second half of 2021. While the “Great Resignation” or “Big Quit” is not unique to one industry or profession, it has made a major impact on Internal Audit (IA) functions across the country. This is glaringly noticeable from the thousands of IA job postings that can be found online, many of which are left unfilled for months at a time or are filled at top dollar and with atypical incentives. As a result of this staffing crisis, our Technology, Risk Advisory, and Cybersecurity (TRAC) Practice team has seen an uptick in inquiries for our IA services to help fill gaps in the near-term and, strategically, for the long-term.

In accordance with the Institute of Internal Auditors’ (IIA) newly updated Three Lines Model, the IA function is a third-line role that provides independent and objective assurance and advice on all matters related to the achievement of organizational objectives. Depending on the size and complexity of the organization, the IA function can look very different, including in how the function itself is sourced. In general, there are four types of sourcing arrangements for an IA function:

• In-house
  
  • The organization maintains its own internal audit department (i.e., employees).
    
    
• Outsourced
  
  • An IA service provider or independent accounting firm is engaged to perform the internal audit function.
    
    
• Co-sourced
  
  • The IA function is performed through a partnership between the internal audit department of the organization (i.e., in-house employees) and an IA service provider (i.e., independent accounting firm).
    
    
• Staff augmentation
  
  • The organization maintains its own internal audit department (i.e., in-house employees); however, it may occasionally subcontract with an IA service provider for a specific engagement or portion of some engagement, typically for a limited period of time. Management and oversight of such engagements is normally provided by in-house IA staff.

Our team is experienced in providing IA services in a variety of arrangements and capacities. Based on our experience and discussions with our clients who have utilized our IA services, here are some of the benefits of having an IA service provider, in any capacity:

• Gaining access to specialized IA talent (e.g., skills, knowledge, expertise) for complex audits.
• Gap coverage for unexpected staffing needs and shortages.
• A third-party point of view or perspective in risk assessments and audit planning.
• Cost savings through reduction or elimination of costs associated with employee compensation and fringe benefits.
• Increased external auditor reliance on IA function, due to an increased perception of quality, independence, and objectivity, which also reduces external audit effort and cost.

To help decide which IA arrangement best suits your organization, consider setting up a meeting to discuss how Citrin Cooperman can help provide value to your business. To get started, please reach out to Michael Camacho at mcamacho@citrincooperman.com or Samantha Kerwin at skerwin@citrincooperman.com.