Recruitment Market Update 2024 – Internal Audit & Controls

Key trends in internal audit recruitment

Consistent demand for IT auditors

IT audit recruitment has remained comparatively robust without being exceptional. There has been steady demand for IT auditors, and securing talented professionals is still a challenging proposition.

The landscape for IT audit jobs is constantly evolving as technology permeates ever more functions of an organisation and new technologies are introduced at ever increasing rates. Over the past decade, we have observed an increasing demand for more sophisticated skills among IT auditors, driven by the growing complexity of risks. Key areas include resilience, cybersecurity, data privacy compliance, cloud security, IT governance, and emerging technologies.

Analytics on the rise

Data analytics has been a topic within internal audit for some time, but until recently, this chatter had not created significant recruitment demand. This is changing, and we are seeing more internal audit jobs that specifically require data analytics skills.

Companies are now investing in analytics skills and technologies, which has led to requirements for data scientists to join internal audit teams. Once there, they provide specialist skills in the processing and analysis of large data sets and develop tools to support internal auditors’ interrogations. Python, Power BI, SQL, Tableau, Excel and MATLAB are all skill sets that are increasingly present in job descriptions for internal auditors and related positions.

Subdued contract market

The changes to IR35 rules concerning disguised employment through the use of personal service companies (PSCs) are nothing new, but the effects of these changes on the internal audit contract market are significant and long-lasting. It is now rare for internal auditors to be engaged on a contract basis using a PSC.

One would normally expect that demand for temporary/contract internal audit staff would increase when the permanent market is subdued. This is not currently the case, and there is very little demand for flexible resource using PSC or PAYE contractors. It is currently much more common for internal auditors to be engaged on a fixed-term contract (FTC) basis. HR departments generally favour the FTC route to hire short-term internal audit staff, as it is usually less expensive, but high-calibre career contractors do not typically wish to be engaged in this manner.

The contractor loses the trade-off between flexibility and rate of pay through a contract. While FTCs are called “fixed”, a notice period exists in every contract, so security is reduced, as is the rate of pay. Companies that engage internal auditors on an FTC basis will invariably lose them as soon as that person either finds a permanent role, or they are offered a day-rate gig elsewhere. This creates planning problems for Heads of Internal Audit.

Therefore, Heads of Internal Audit are increasingly attempting to bypass HR functions and engage with consultancies and statement of work service providers to secure the flexible resource or subject matter experts (SMEs) they need to deliver their audit plan. BSS, Barclay Simpson’s service and solutions consultancy arm, has experienced a strong uplift in the use of its services to deliver outsourced and cosourced internal audit services.

Lack of investment in training

Consultancy firms that provide internal and external audit services were historically a major source of candidates commencing their internal audit careers. This tradition is not as prevalent as it used to be. These firms now hire many staff from overseas utilising the Skilled Worker visa sponsorship route. Doing so enables them to attract relatively experienced staff at a reasonable cost, compared with hiring and developing junior staff to the same level. However, the staff employed on Skilled Worker visas are essentially trapped unless they can find an employer willing to sponsor a visa application, which is rare, or until they obtain the right to remain and work after five years of being sponsored. This creates a bottleneck in the market.

Companies themselves are keen to recruit experienced internal audit staff. They used to hire external auditors and then train them as internal auditors, but the strong preference is now to hire experienced internal and IT auditors. Again, this creates supply-side issues with companies as they chase to recruit from too small a talent pool. These supply-side training and development issues need to be addressed by the profession but there are currently no signs of any concerted efforts to do so.

Salary trends in internal audit

From 2022 through to mid-2023, there was an 18-month period of exceptionally high demand for internal auditors, which created intense competition in the recruitment market.

As a result, salaries increased across the board. Those actively seeking new roles saw rises of 20-25% on their previous salary, while those who remained with their current employer were awarded 10-15% increases as companies strove to retain talent. However, the reduction in demand through H2 2023 and into 2024 has changed the supply and demand dynamics, with salary inflation significantly reduced.

In H1 2024, salary increases achieved on the recruitment market have tended to be in the 7.5-15% range while salary increases by those who have remained with their current employer have averaged around 5-7%. We have not seen much demand-led pressure on salaries in the short term, but the underlying skills shortages across the internal audit profession suggest this situation could change quickly in response to relatively modest increases in recruitment levels.