Three years have proven to be a lifetime in the world of internal audit and Sarbanes-Oxley compliance. When Protiviti conducted its first Internal Audit Rebalancing survey in 2005, the landscape was much different. Companies were still determining the most efficient and cost-effective ways to achieve compliance with Section 404 of the Sarbanes-Oxley Act under the original Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2, and doing so without any specific guidance from the U.S. Securities and Exchange Commission (SEC). Internal audit (IA) departments were just starting to consider how to begin to shift their focus back to more traditional and, in many cases, broader responsibilities.
Protiviti conducted its second IA Rebalancing survey in late 2006 and early 2007, and saw that the landscape already had shifted considerably. Due in part to experience and key learnings from the rebalancing process, as well as deeper knowledge of Section 404 compliance – having undergone the process for several years – our second survey showed that more organizations were realizing the benefits of rebalancing, whether they had achieved or were in the process of achieving it. In this study, 25 percent of respondents reported they had achieved rebalancing.
We conducted our third Rebalancing survey in January and February of this year. A total of 321 respondents – two-thirds of whom are either chief audit executives (CAEs) or audit directors – completed the survey in person or online.
Again, the landscape has changed considerably since our previous study. In May 2007, the SEC approved its interpretive guidance to management on implementing Section 404 of the Sarbanes-Oxley Act. Also in May, the PCAOB issued a new final standard on auditing internal control over financial reporting, as well as a related independence rule and conforming amendments to its auditing standards. This new standard, Auditing Standard No. 5 (AS5), An Audit of Internal Control Over Financial Reporting Performed that is Integrated with an Audit of Financial Statements, superseded Auditing Standard No. 2. The SEC formally approved AS5 in July 2007.
While many of the study’s results are similar to the 2006/2007 survey – including the number of companies that have achieved rebalancing (22 percent) – clear trends emerge that show IA functions are employing more defined and sophisticated strategies to achieve rebalancing, due in part to the SEC’s and PCAOB ’s guidance.
The 2007 survey’s key findings focus on the following topics:
- Impact of PCAOB Auditing Standard No. 5 and SEC’s Interpretive Guidance
- Primary Benefits of Rebalancing
- Sarbanes-Oxley Compliance: Current Status
- Rebalancing Status: One Year Ago vs. Today
- Strategies: Current vs. Planned
- Activities as Part of Rebalancing
Download the entire survey report:
(30 pages, 1.5 MB)