Commerce and industry
Internal audit has suffered during the downturn because organisations tend to see it as important – but not business–critical – to maintain headcount in the function. If someone moves on, the business can still operate so that individual may not be replaced immediately. Audit teams are simply asked to concentrate on their core responsibilities and the less important reviews will be dropped from the audit schedule.
Due to on–going austerity measures, many businesses are running with reduced teams in internal audit and have budgetary restraints that prevent them from recruiting. In addition, the interim market has also been hit as a result of companies relying on top–tier accountancy firms to provide staff for specific projects on a co–sourced or outsourced basis.
Salaries have stayed stable at junior and mid levels, but organisations look to pay lower salaries for department head and director positions compared with those on offer prior to the financial crisis. Salaries may be down as much as 10%–20% on five years ago for some posts due to employers having less competition in the market. Bonuses are often not paid out to maximum value if businesses miss their corporate targets.
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The internal audit function within commerce and industry is suffering from a talent shortage at entry level. FTSE and US–listed companies tend to use their internal audit teams to attract high–calibre newly qualified accountants from the Big 4 firms and use them as a talent pool for the future. These individuals would start out in internal audit and then move into management roles within finance or operations. But a cutback in graduate intake by the Big 4 in the last few years has meant that not enough newly qualified accountants are entering the market to meet demand. As a result, large organisations now consider people from top 20 firms for their audit teams.
Anti–bribery and anti–corruption activities have been a major focus of businesses over the past 12 months as organisations look to comply with the UK Bribery Act and the US Foreign Corrupt Practices Act. Qualified accountants with language skills are sought after by organisations that have their European headquarters in the UK. Often talent from mainland Europe will join the central internal audit function where they can gain commercial skills and brush up on their English before returning to the operation in their home country and taking on a management role. London and the South East remain strong markets due to the density of large company head offices and audit departments in the region.
Demand for internal auditors within the financial services sector remains buoyant due to an increased focus on control in the wake of the banking crisis. Financial institutions have invested in risk management and governance to ensure that they have sturdy controls underpinning their activities. As banks will need to maintain strong internal audit capabilities on an on–going basis, the function is a good route for newly qualified accountants to break into financial services. But employers in this sector can afford to be picky and they look for individuals with the highest–calibre Big 4 experience and sound academics.
Candidates who stand out in today’s market don’t just possess strong, technical accounting skills. They also act as consultative business partners and can engage with other parts of the business, taking a commercial view and understanding the bigger picture. Employers across all sectors are looking for strong communicators and proactive, outward–looking individuals who can identify areas of opportunity such as streamlining processes to save costs. Sustainability is not yet on internal audit’s agenda in a big way, but that could change over the next few years.
Corporate governance remains an important issue for organisations within both industry and commerce and financial services. But budgetary restraints mean that internal audit teams are running lean despite being expected to provide the same level of assurance as they would if they were fully staffed. This approach is not sustainable in the longer term and once the economy recovers, organisations are likely to boost numbers to allow for more ‘value add’ audit work.
As market confidence increases and drives business performance, the higher end of the recruitment market should start to move again, which will impact on middle management roles and cause salaries to rise. Demand for good internal auditors will always exist, whatever the sector, and the junior end of the market is already buoyant.
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