More internal auditors are reporting to their organizations’ chief executive officers than before, according to a semi-annual study by the Institute of Internal Auditors.

Of the chief audit executives who participated in the IIA’s most recent Pulse the Profession survey, 70 percent currently report administratively to either their CEO or their chief financial officer – with the number reporting to the former growing significantly.

“When Sarbanes-Oxley was enacted about 10 years ago, only around 20 percent of CAEs reported administratively to their organization’s CEO. Now about a third have that direct reporting line, and I believe the percentage will continue to grow in the coming years,” said IIA president and CEO Richard Chambers. “The higher up in the organization a CAE reports, the more objective that individual can be in overseeing audits of tough areas of responsibility and the more independent the internal audit function becomes in the eyes of stakeholders. It enhances the credibility of the CAE and the internal audit function across the rest of the organization.”

On a more disturbing note, 19 percent of all respondents -- and 32 percent of those from Fortune 500 organizations -- reported that at least one senior officer had been dismissed for ethical or conduct lapses. That may be a result, in part, of the fact that only “a slim majority” of responding organizations conduct ethics training for new hires.

“CAEs have to be an integral part of the conscience of the organization,” said Doug Anderson, CIA, CRMA, finance director and former CAE at Dow Chemical. “When they see that their organization’s values are not being lived up to systematically, they have to become vocal participants in trying to rectify that. They have to be champions. It cannot be a spectator sport.”

Among the other findings of the survey:

  • Among Fortune 500 respondents, 27 percent expect to increase their staff in the coming year, compared to 22 percent a year ago.
  • Analytical/critical thinking was the most highly sought-after skill, with 77 percent of all respondents and 76 percent of Fortune 500 respondents naming it, followed closely by the ability to communicate well and data analytics.

The report is available online here.

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