View from IIA Global: Staff and skills – the gig economy
Fifty or so years ago, staffing an internal audit function was simple. Almost all internal auditors had backgrounds in accounting or finance, and almost invariably they were full-time employees of the companies they audited. It was a staffing model that worked fairly well. That’s not a surprise. Most internal audits were financial audits, and their most sophisticated tool was likely to be a calculator.
Employing that staffing model today could be a recipe for failure.
It’s not that full-time employees with an accounting background don’t make good internal auditors – many are superb. But today’s audit departments deal with a dynamic range of risks that would have been unthinkable a few decades ago. Financial risks are still important, but our plans and schedules also include concerns around technology, operations, compliance, fraud, governance and myriad others. Indeed, the demand for internal audit professionals who can respond to cyber threats and other technology-related risks outpaces supply.
It’s impossible to guarantee that we will always have the right resources to deal effectively with every new audit situation. Today, you might need an auditor with derivatives knowledge and a background in fraud investigations. Tomorrow, you could be looking for someone experienced in mergers and acquisitions who speaks Thai. Auditing at the speed of risk means we must constantly look at the internal audit function’s capabilities compared with the risks we need to address.
If the internal audit department has skills gaps – and most do – then we need to fill them. Enter the “gig economy” – a labour market characterised by short-term contracts or freelance work, as opposed to permanent jobs. This concept is starting to find a natural fit in internal auditing, as practitioners with specialist skills offer their services through short-term, on-demand contracts.
Gig work is a massive trend. Digital platforms such as Uber and Deliveroo have transformed the work world, enabling more people to work remotely with flexible work schedules. According to research published in 2019, the gig economy in Britain doubled in the previous three years, and gig platforms now employ one in ten working-age adults. Freelancers have become the fastest-growing labour group in the European Union.
In “Uber auditing,” audit executives who need a specialist auditor might turn to an app and ask someone to be there at an appointed day and time, just as we now go to an app and order a taxi. That’s not far-fetched. In fact, Uber might be competing for your internal audit work. The company has launched a new Uber Works Platform in the Chicago area. Uber Works app users can get detailed information about jobs they’re interested in, including information about gross pay, work location, skills and required attire.
Many of us believe that there are important advantages to employing internal auditors on a long-term basis. Longer term employees develop a deeper understanding of a company’s risks and are more likely to develop strong working relationships with management. But in an environment of constantly changing risks and hyper-competitive job markets, it’s important to have as many options as possible. Gig auditing is not likely to replace insourcing, co-sourcing or outsourcing; it’s simply another source for internal audit talent.
No method of internal audit staffing is risk-free. The head of audit is responsible for maintaining audit quality and, to assure independence and objectivity and limit liability, assurance engagements must be controlled by the internal audit function. Internal audit resources must be supervised and be appropriate, sufficient and effectively deployed to achieve risk-based audit plans.
Audit executives also need to watch evolving legislation and regulation for the gig economy. The UK’s Good Work Plan, for example, enables workers to request a stable contract after six months’ work and requires that they get information about their rights from day one of the gig.
Some internal auditors prefer the security of a regular paycheck, while others like the flexibility of short-term contracts. Gig auditors can choose clients and control their time and travel. Gigs could help you get to know more about potential permanent employers, or be a route to a more flexible way of life.
Life as an Uber auditor isn’t for everyone, and it’s certainly not the only way to staff internal audit. But whether you’re looking for work or for talent, you make better decisions if you consider all the options.
Richard F Chambers writes a blog at chambersontheprofession.org and tweets at twitter.com/rfchambers. His third book, The Speed of Risk: Lessons Learned on the Audit Trail, 2nd Edition, is available at theiia.org/bookstore
This article was first published in March 2020.