Altamonte Springs, Fla. (May 27, 2004) -- An overwhelming majority (92 percent) of internal auditors have identified gaps in their organization’s internal controls framework, according to a survey by Jefferson Wells International and the Institute of Internal Auditors.


Among those who identified gaps, 34 percent said that the gaps related primarily to a lack of process control-related documentation; 23 percent said that they were primarily related to formal review and approvals; and 19 percent cited segregation of duties. Among the 16 percent who said that the gaps were primarily in other areas, information technology-related gaps figured prominently in the explanations, the report noted.


The vast majority of respondents said that their internal audit functions are heavily involved in Sarbanes-Oxley compliance initiatives, which for the most part still have significant ground to cover before Section 404 deadlines begin to take effect in November. Only 1 percent of respondents said that their organization’s SOX implementation has concluded, according to the study, based on responses from 203 IIA members.


Lack of resources/time constraints was the most often cited SOX implementation challenge (cited by 103 respondents), followed by an inadequacy or lack of documentation (cited 46 times) and communication issues (failure to engage process owners or lack of executive support). Other obstacles cited included a lack of definitive standards; the size or geographic reach of the organization; a lack of sufficient guidance from external auditors; controls identification and testing; and the cost of the project/efficiency.


Half of respondents reported that their companies are co-sourcing SOX compliance processes with third parties. Among those who said that their companies are working with an outside expert, most (54 percent) cited resource constraints and a need for greater expertise (24 percent) as the reason.


-- WebCPA staff

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