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Internal Audit Starts to Feel the Pinch

Budgets are shrinking but focusing on enterprise risk management and technology may help.

By Dave Lindorff | Updated on March 30, 2009

Paul Sobel knows a thing or two about budgets. As vice president for internal audit at Mirant Corp. in Atlanta, he has spent his time poring over the minutiae of the $3 billion merchant energy company’s books. Now, however, he has to think about his own budget as well. With the economy in crisis, the budget for his 14-person department is “flat,” he says, which means he has had to “be smart about allocation of resources.” For Sobel, that has meant shifting away from the past few years’ concentration on Sarbanes-Oxley testing to focus more on technology risk and strategic risk.

It’s a story being repeated all across the corporate landscape, according to PricewaterhouseCoopers, which just conducted a survey of more than 700 internal auditors. “This was the first survey we’ve conducted in which internal auditors said their budgets had been reduced or that they expected [them] to be reduced,” reports Gary Chamblee, internal audit services partner and co-author of the report. “Even in Fortune 500 companies, we had auditors saying they expected reductions.”

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