Among the noteworthy findings from the recently-released 2016 Board Practices Report - a collaborative board practices benchmarking effort between Deloitte LLP's Center for Board Effectiveness and the Society - are those relating to board and audit committee oversight of the company's Internal Audit function.
Key findings include:
- 92% of respondent companies' chief audit executives (CAE)/Internal Audit (IA) regularly present to the Audit Committee, but the practice varies depending on company size, with 97% of large-caps and 93% of mid-caps reporting that this is the case, vs. just 70% of small-caps.
- Overall (all respondents), 89% of companies' CAE/IA regularly attend the entire Audit Committee meeting but, again, company size matters - with 93% of large-caps and 90% of mid-caps reporting this practice, vs. just 70% of small-caps.
- The CAE/IA regularly meets in executive sessions with the Audit Committee at 80% of companies overall; however, there are huge company size-related variations, with 90% of large-caps, 79% of mid-caps, and only 47% of small-caps reporting this practice.
- Just 8% of IA heads overall regularly attend full board meetings; however, that figure reflects 18% of mid-cap and large-cap Financial Services companies vs. just 5% of mid-cap and large-cap Nonfinancial Services companies, and zero small-caps.
- 49% of companies overall have done benchmarking on their IA function (e.g., budget, resources), but that percentage reflects significant company industry and size variations - with 57% of Nonfinancial Services and 60% of large-cap companies (Financial and Nonfinancial) having done so, compared to just 25% each of Financial Services and small-cap (Financial and Nonfinancial) companies.
As reported in this week's Society Alert, a recent member-requested Society Quick Survey of financial services company members revealed that the vast majority of companies adhere to best practices as relates to their chief internal auditor reporting structure - with over 96% of audit chiefs reporting functionally to the audit committee or the board of directors, and more than 90% reporting administratively to management. Of those reporting administratively to management, over 39% report to the CEO or President; nearly 37% report to the CFO, VP of Finance or similar; and nearly 24% report to other executives or legal counsel.
The iconic Board Practices Report - which presents findings from a survey distributed to the Society's public company members in late 2016 - covers trends in over 15 areas of board practices and hot topics including cyber risk, shareholder activism, and board diversity.
See our prior report: "Internal Audit Pressures," and numerous additional resources on our Internal Audit and Audit Committees topical pages.