Internal Auditing in State & Local Government

Article excerpt

For those outside the internal auditing profession, the natural questions are: Who are these people? What kind of work do they do? How much are they paid? For those within the profession of internal auditing, some logical questions might include: What forces are influencing our jobs? Are we considered to be valued consultants to management? To whom do we report? How does my employment situation compare with others? The data compiled for this article should provide meaningful and useful answers to many of these questions.

Data

In 2000, with support from the Institute of Internal Auditors (IIA), the authors completed a survey of approximately 3,000 internal auditing directors, representing 48 types of industries, to determine their role within their organization, degree of job satisfaction and salaries. Those individuals surveyed were HA members. State and local government were two of the 48 industries. The population of 3,000 contained 160 local government directors and 216 state government directors. The 600 responses included 61 provided by local government internal audit directors, a 38 percent response rate, and 54 provided by state internal audit directors, a 25 percent response rate.

Data gathered from these survey instruments provide a unique opportunity to compare state and local internal auditing functions with internal auditing functions found in the aggregate of all non-government industries combined, hereafter referred to as the private sector. The figures that follow are formatted to facilitate these comparisons.

Profile of Internal Auditing Directors

Gender

The top internal auditing position, the director, continues to be primarily filled by a male. As Figure I indicates, 74 percent of the director positions in both local government and the private sector are currently filled by males. The state government total is 68 percent. It is interesting to note, however, that the gender mix within the profession is evolving. A similar survey made by the authors for 1990 disclosed that the percentage of males occupying the director of internal auditing position in local government, state government and the private sector was 86 percent, 85 percent and 85 percent, respectively.

A primary reason for the male to female gender shift is the labor pool's changing gender characteristics. In 1978, surveys made by the American Institute of Certified Public Accountants (AICPA) of accounting graduates entering the labor pool indicated that only 28 percent of the graduates were female. The percentage of female graduates has risen very rapidly. By 1992, colleges and universities reported more female accounting graduates. That trend continued to 2000. It is reasonable to conclude that this gender change in the labor pool will and has affected the gender mix in the directorship.

Salary

The mean annual salary of local and state government internal audit directors is somewhat less than the mean annual salary provided to private sector internal audit directors. However, when analyzed via the t-test at a 95 percent confidence level, these differences in salary were not found to be statistically significant. Although we did not directly identify reasons for these salary differentials, one can speculate that at least part of these differences is caused by the employment conditions. That is, salaries paid to government positions are likely to be constrained by the job classification level of the position. Such constraints on salary levels are not as rigid in the private sector. It is also interesting to note that directors in both state and local government have slightly more experience in auditing than that of their counterparts in the private sector. They also tend to have held their current position longer.

Despite the fact that local government internal audit directors are paid annual salaries which are, on average, approximately $10,000 less than salaries paid in the private sector, the same percentage (69 percent) of directors in both areas consider their salaries to be fair. …