Over the next five years, the internal audit function will be drawn down a new path, away from a focus on internal controls and compliance-driven activities toward risk management and international accounting rules.

The Institute of Internal Auditors says auditors will focus less on the hot button areas of the past several years, namely evaluating internal controls over financial reporting, auditing of financial risks, fraud investigations, and operational and compliance audits. Instead, in response to more recent events and concerns, internal audit departments will be deployed to deal with corporate governance, enterprise risk management, strategic reviews, ethics audits, and International Financial Reporting Standards

That's the conclusion of IIA's 2010 global survey, gathering the views of more than 13,000 internal auditors in 107 countries. The results come as no surprise to Richard Chambers, president and CEO of IIA. “It's affirmation of what's going on globally and what we have been observing tactically in the United States,” he says. “The profession is poised to continue the realignment that has been going on for a couple of years.”

The survey also revealed more than half of internal audit organizations get their staff from transfers within the organization, suggesting internal audit is increasingly tapping operational talent to lend insight to the audit process. About half of the internal auditors who participate in the survey expect to recruit more staff during the next five years.

Chambers says if internal audit is practiced correctly, the profession will continually align with where the risk in a particular enterprise resides. Take risk management as an example, he says. “Out of the economic crisis, there was a recognition that risk management didn't serve a lot of companies very well, particularly in the financial services sector,” he says. “Now internal audit is focused on what are the big risks going forward? Inadequacy of effective risk management is a big risk."

IIA is reporting the results of the survey in five separate reports. The first two cover characteristics of internal audit activity and the core competencies demanded of internal auditors. Future reports will address measuring the value of internal audit, what's on the horizon for the profession, and factors that call for change in the practice of internal audit.