Internal audit departments straining to stay ahead of rapidly emerging risks might benefit from a peek into how other companies are coping with it.

The Institute of Internal Auditors has published an alert that summarizes how internal auditors are handling five areas of risk that organizations are facing: credit risks, cost or expense reduction and containment, exposure to distressed third parties, liquidity risks, and reputational risks. The IIA identified the priority risk areas at a springtime roundtable session with chief audit executives from Fortune 100 and Fortune 250 companies, then followed up on the roundtable with surveys on the five risk areas to understand how companies are addressing them.

The resulting alert, “What's Next for Internal Auditing," examines how chief audit executives are addressing the five key risks that are emerging as a result of the current economic recession. The surveys asked chief audit executives to describe what specific activities are being done or should be done relative to the five risk areas, what risks companies are identifying, how companies are scoping and establishing objectives for the increased focus on a given risk, and what new information companies have gathered as a result of their increased focus.

The report summarizes how companies are responding to the various risks. On credit risks, for example, the report says many companies are monitoring their financial processes and business areas most affected by credit risks, plus they’re identifying where and how credit risks are hitting the bottom line. On cost reduction, companies are including cost-cutting as part of their universe of auditable activities, looking for weaker controls, lack of control oversight, and segregation of duties, the report says.

Richard Chambers, CEO of the IIA, says the study affirms how rapidly the internal audit process is evolving in response to the current economic crisis. “Internal audit used to focus very heavily on assessing the adequacy of financial controls to assure compliance with Sarbanes-Oxley,” he says. “Now there’s been a very rapid succession in the last 24 months. As the corporate risks have changed, so has the internal audit focus.”

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