A new report finds that many internal audit leaders say they don’t have the funds to sufficiently run their departments, even as many reported increases in funding. According to the 2025 North American Pulse of Internal Audit Survey, nearly half of respondents said their internal audit departments were either insufficiently funded or only “somewhat” sufficiently funded.
According to the report, released this week by the Institute of Internal Auditor’s Internal Audit Foundation in partnership with AuditBoard, 22 percent of the internal audit leaders surveyed said that funding levels for their internal audit departments were either “generally insufficient” or “not at all sufficient.” Another 25 percent said their internal audit departments were only “somewhat sufficient.” Among types of organizations, those in the public sector (65 percent) and non-profits (60 percent) were most likely to report funding insufficiencies. About 43 percent of internal audit leaders at publicly traded companies said their budgets were either insufficient or only somewhat sufficient.
This news comes even as more internal audit leaders say that budgets have increased than decreased. According to the report, 34 percent said their budgets had increased last year, 11 percent said they had declined, and 64 percent said that they had staid about the same. Those levels were about the same as the year before. A similar scenario played out with internal audit staffing levels, with 25 percent reporting increases in staffing, 11 percent reporting a decrease, and 64 percent saying they remained unchanged.
Funding Related to Strategic Alignment
A major finding of the 2025 IIA Pulse report was that funding levels were correlated with how well aligned internal audit functions are with the overall organizational strategy. Internal audit functions that are more strongly aligned with overall organizational strategy are more likely to have sufficient funding. The results underscore the value that internal audit functions provide when they play a strategic role within organizations, along with internal audit’s expanding scope of responsibilities. Internal audit functions that are fully aligned with strategic objectives have a 31-percentage-point advantage in funding compared to those that are only somewhat aligned.
“Internal audit executives understand that closely aligning their activities with organizational goals allows them to play a more strategic role,” said Anthony Pugliese, president and CEO of the IIA. “Technology is the path of the future, with internal auditors integrating more tools to increase efficiency and effectiveness. This enables the profession to take on a broader role, meeting the demands of an evolving business environment and affirming our increasing importance and relevance.”
In order to achieve greater alignment, many chief audit executives said they hope to provide more advisory services in the future to respond to the strategic priorities. Currently, internal audit activity is comprised of 75 percent assurance and 25 percent advisory work for most functions. However, CAEs seek to increase advisory work to 40 percent going forward, according to last year’s Vision 2035 report.
A growing percentage of CAEs have responsibility for enterprise risk management (ERM) at their organizations—nearly one-third in 2024, compared to only 24 percent nine years earlier. Other common areas of responsibility are fraud (47 percent), Sarbanes-Oxley (SOX) (36 percent), and ethics and whistleblower programs (33 percent). Some are wondering if internal audit is being asked to do too much?
AI Use for Audit Activities Growing Rapidly
The percentage of CAEs reporting the use of GenAI for internal audit activities has more than doubled since last year, rising from 15 percent to 40 percent, highlighting the profession’s growing adoption of technology.
When it comes to technology skills in general, data analytics are seen as foundational to internal audit activity. More than three quarters of CAEs said data analytics was the technology skill they most sought to enhance among staff, and more than 90 percent said adoption of data analytics was essential for the future of the profession. Beyond data analytics skills, other priority areas for staff development include communications and collaboration (53 percent), cybersecurity (51 percent), and IT (46 percent).
Outsourcing and Co-Sourcing Practices
To address specialized areas such as cybersecurity and IT audits, many internal audit functions are leveraging outsourcing and co-sourcing arrangements. The report indicates that outsourcing is commonly used for cybersecurity (38 percent) and IT (36 percent) audits. For publicly traded companies, outsourcing for Sarbanes-Oxley compliance rises to 54 percent, while in the financial services sector, outsourcing for cybersecurity climbs to 49 percent, and IT to 53 percent. These practices allow internal audit functions to access specialized expertise and manage resource constraints effectively.
Additional Findings:
- Internal audit staff growth has stabilized to near pre-COVID levels. The percentage of functions with staff growth has stayed consistently around 25 percent since 2022. (For context, functions with staff growth dropped from 29 percent to 18 percent as a result of the COVID pandemic.)
- Nearly 70 percent of CAEs had to recruit to fill a new position or a vacant position last year. Even among smaller functions (4 to 9 FTEs), recruiting was necessary for nearly half of CAEs.
- Audit plan priorities include operational auditing (19 percent), financial reporting (16 percent), and compliance and regulatory reviews (14 percent) tend to make up the largest portions of audit plans on average.
- Audit functions also consistently invest a large amount of effort toward cybersecurity and IT audits – with a combined average of 17 percent.
The insights presented in the 2025 Pulse report are based on a comprehensive survey conducted from October 3 to November 14, 2024. Respondents primarily came from organizations headquartered in the United States (85 percent) and Canada (10 percent), with the remaining 5 percent from the Caribbean or outside North America. This diverse respondent base provides a broad perspective on the current state of internal audit across various industries and organizational sizes. 
Joseph McCafferty is editor & publisher of Internal Audit 360°