Contract recruitment trends in in Internal Audit, Assurance and Controls

The contract recruitment market for internal audit, assurance and controls enjoyed a buoyant year in 2023, having experienced a relatively subdued period over the preceding 12 months. 

Demand peaked in the first six months of the year, but gradually tapered off in the latter half. Nonetheless, it has still been a busy time for contractors, temporary workers and co-source services. 

“We have seen a lot of interim hiring across both internal audit and controls roles,” says Andrew Whyte, Associate Director and Head of Interim at Barclay Simpson. 

“Preparations for UK SOx were a particularly large driver of demand, with organisations seeking either experienced project directors or internal UK SOx controls managers to help them comply with any potential obligations.” 

As such, leveraging subject matter expertise was the primary reason for hiring interim staff for 47% of organisations in 2023, while 17% engaged with contractors for specific projects. 

Two years ago, 18% of employers said they hired interim staff because they simply could not source the permanent employees they needed. This figure has since plummeted to just 5%, which is unsurprising given the more depressed demand in the permanent market over the last 12 months. 

In fact, our consultants report that permanent employees are increasingly open to contract jobs. Some are contractors who are returning to the space after being forced to switch to permanent roles when the interim market slowed in 2022. 

Other professionals, however, are exploring contracting for the first time, citing the cost-of-living crisis and a desire for greater flexibility in their role. 

Primary reasons for using interim, contract and
co-source staff

The long-term effects of IR35

Over the last few years, we’ve tracked how employers and candidates have navigated the IR35 reforms that were introduced in April 2021. 

Initially, many organisations took a blanket approach to the changes. Larger firms often chose not to engage contractors who were deemed ‘outside IR35’, and our data showed fixed-term contracts (FTCs) became the most common way to access flexible resource at the height of the pandemic. 

Today, 27% of organisations that use flexible resource still primarily favour FTCs. But as the interim market has improved, fewer candidates are willing to consider these arrangements, believing they offer neither the job security of a permanent role nor the financial incentives of traditional contracting. 

Larger businesses also continue to be the most likely to avoid outside IR35 arrangements, but this approach is likely to mean they are missing out on securing quality contractors. 

Indeed, 43% of organisations currently claim that IR35 reforms have affected their ability to find skilled interim workers, with approximately one in 10 arguing the impact has been ‘significant’. 

“We’re finding that it’s actually smaller, more agile firms that are usually able to get the best talent and save money within the interim market because they are more likely to be flexible about outside IR35 arrangements,” Andrew Whyte explained. 

Key factors affecting internal audit recruitment

In 2024, we expect various political, economic and social factors to have an impact on hiring trends across internal audit, assurance and controls. 

Strong demand for cyber skills

Each year, the Chartered Institute of Internal Auditors (IIA) publishes its Risks in Focus report, which highlights the key challenges facing the profession over the coming 12 months. 

In the 2024 edition, cyber security ranked as the biggest risk for auditors for the sixth year in a row, with 84% of chief audit officers (CAEs) considering it a top five risk for their organisation. These concerns continue to affect hiring demands, with cyber skills highly sought-after among employers. 

According to the IIA, nearly a third of CAEs also believe climate change, biodiversity and environmental sustainability are a top risk. However, while we have seen more professionals looking to obtain the CFA Institute’s Certificate in ESG Investing or a similar qualification in recent years, very few roles currently require these skillsets. 

Bridging the data analytics gap

Many internal audit departments in the UK have been slow to adopt data analytics. In 2022, only 7% of functions were using machine learning or AI-powered techniques, and approximately a third weren’t using any form of data analytics at all. 

Organisations are nevertheless working hard to close the gap, and we are experiencing sustained demand for audit analytics specialists across teams of all sizes. 

Unfortunately, skills shortages are hindering employers’ efforts. IIA research reveals that 49% of CAEs believe the biggest barrier to progress is the lack of existing analytics skills and resources within functions. 

To counter this, some organisations are hiring data scientists or data specialists who they can train to perform audits. This not only gives an immediate boost to the company’s analytics capabilities, but also enables these professionals to share their expertise and help upskill the audit function more generally. 

Inclusion and diversity

We believe internal audit functions are in a unique position to assess how their organisations are performing on inclusion and diversity matters, while also advising on ways to address any shortfalls in policy. 

It is particularly important, then, that they set a good example themselves. Thankfully, our research and conversations with our community members show that internal audit departments continue to make good progress on their equality, diversity and inclusion (EDI) goals. 

Nearly 90% of employers of internal audit, assurance and controls professionals agree their organisation has a diverse and inclusive culture. Most encouragingly, 55% ‘strongly agree’. 

Furthermore, 86% of businesses believe their HR processes are designed to adequately support gender equality and equal opportunities. 

Saying that, there is always room for improvement. As the market began to slow in 2023, fewer employers focused on inclusion and diversity when hiring. A scarcity of talent typically meant that filling key roles became the overriding priority for many firms. 

Internal controls was one of the few areas to buck this trend, with employers placing greater emphasis on EDI last year. We expect this to continue in 2024, given the FCA and PRA’s recently published proposals on how to improve inclusion and diversity within the financial services sector. 

Post-pandemic attitudes to flexible working

Nearly four years have now passed since the UK first went into lockdown in March 2020 due to the Covid-19 pandemic. Many organisations handled the crisis well, pivoting their policies and processes quickly to allow staff to continue working safely from home. 

Remote working became the ‘new normal’, but has this led to a permanent step-change in attitudes towards flexible working? 

A recent nationwide Hays study across 21 industries found that more employees are now working fully from the office (43%) than via a hybrid model (39%) for the first time since before the pandemic. 

98% of employers currently offer hybrid or remote working*

*Data taken from Barclay Simpson survey.

Barclay Simpson’s data tells a slightly different story within the audit industry. According to our candidate survey, only 1% of internal audit, assurance and controls professionals are currently expected to work five days in the office, while the majority (54%) work from home two or three days a week. 

That said, we are seeing a broader shift in hybrid working models, with employers wanting people back in the office more regularly. This often means a minimum of three days a week in the office for many London-based roles. 

More than half (51%) of organisations said they required staff to come in at least three days a week in 2023, up from 41% the previous year. Fewer employers are also confident that their existing hybrid or remote working policies will remain in place over the long term (81% last year versus 89% in 2023). 

Understandably, employees are reluctant to give up the added flexibility they enjoyed during the pandemic. Nearly 70% of professionals admit they would consider changing jobs if they weren’t able to have the flexible working set-up they desired, which is a notable rise from 58% who said the same the previous year. 

“Flexible working is becoming increasingly important for many professionals within internal audit, assurance and controls,” says Adam Hair, Senior Consultant at Barclay Simpson. 

“This is especially true for the many candidates who started families during lockdown. As hybrid working mandates change, they are being asked to work from the office more, so they’re seeking new roles that offer better flexibility for childcare.” 

More than a quarter (26%) of professionals told us that remote working or a better work-life balance was the main reason they sought a new role in 2023. 

Organisations appear to be aware their approach to flexible working is becoming an issue. Nearly a third (32%) say their hybrid or remote working policy is causing recruitment or retention problems – a moderate increase from 26% in 2022. 

On the other hand, regional employers could benefit from stricter flexible working policies being introduced at London-based firms. 

“During the pandemic, most people were working remotely, so regionally based candidates could accept higher-paying roles further afield that required minimal office presence,” says Steve Driver, Principal Consultant at Barclay Simpson. 

“Employers outside London therefore struggled to attract talent, but candidates are beginning to seek out local opportunities again as companies tighten their flexible working policies.” 

Public sector organisations also stand to gain from these changes. Flexible working has traditionally been an attractive perk of public sector roles, which often struggle to compete on salary. 

These jobs were subsequently less desirable in the pandemic years because most workplaces offered remote working. If other employers continue to rein in their flexible working policies, we expect these roles to become more attractive again. 

Salary and bonus trends

The internal audit, assurance and controls market experienced incredible salary growth across 2021 and early 2022. This rate of growth, while undoubtedly welcomed by professionals, was always going to be difficult to sustain long term. 

As such, salary growth began to level off last year, although it remained firmly in line with historic averages. Candidates’ salary expectations, meanwhile, continue to be high, driven by bumper pay rises in recent years and the ongoing cost-of-living crisis. 

While some professionals can still achieve a sizeable salary boost in today’s market, employers are becoming increasingly reluctant to match current demands as their budgets tighten. Indeed, 16% of organisations believe salary expectations are ‘not at all’ aligned with what they can offer. 

Despite this, employers recognise the importance of retaining their best staff, so many businesses are providing generous counteroffers in an effort to convince employees to stay. 

Employers intend to increase base salaries by 5% on average in 2024

“There is much more variability in salary growth at the moment than in previous years,” says David Hornsby, Director at Barclay Simpson. 

“Some employers are having to increase salaries by a decent amount to stay competitive, otherwise they risk losing staff. However, firms that kept pace with previous pay growth have not needed to raise salaries by quite as much.” 

With regards to bonuses, our data shows a relatively mixed bag of results. More organisations are set to offer bonuses in 2024 than 2023 (90% versus 82%, respectively), but the value of bonuses appears to be dipping. 

In 2023, the average bonus amounted to 16% of a candidate’s salary – a figure that dropped from 19% in 2022. 

Not all candidates are motivated purely by remuneration, of course. As flexible working becomes a more pivotal issue, it’s not uncommon for professionals to accept a sideways move on salary if a new role offers greater freedom to work from home. 

We predict that flexible working will be a key battleground in the war for talent over the coming years, as employers try to identify the remote and hybrid working models that work best for both their business and staff.

Internal Audit salaries

Attract and retain the internal audit, assurance and controls professionals you need with Barclay Simpson

Having recruited internal auditors and IT auditors since 1989, we have a deep understanding and extensive network of contacts in this specialist market. Within our audit team we have specialist consultants working in banking, asset management, insurance, commerce and industry, professional consultancy and the not-for-profit sectors. We can help you create a talent attraction strategy with competitive salary offerings or help you find a role that aligns with your skills and long-term career goals, and support you from interview through to salary negotiations. Arrange a consultation today to see how Barclay Simpson can support you as you build an internal audit function that’s future proof.