• when spending is expanding rapidly
• when revenues and spending are under pressure to contract

Budget cuts may sometimes be necessary

Audit committees and oversight authorities should consider their options carefully before the make a decision to cut internal audit. This services is important for several reasons, as internal audits:

• ensure accuracy of financial reporting — As organizations seek greater access to capital markets, the accuracy of financial reporting becomes particularly critical
• give assurance of efficiency and effectiveness — operational audits and performance audits are among the principal services offered by many government audit organizations
• foster greater accountability by shareholders and stakeholders — accountability over the effective use of scarce resources is vital
• find opportunities for cost reduction and containment — when forced to make difficult choices on which services to continue as revenues falter, your internal auditors are uniquely positioned to offer insights and perspectives to management

Most important of all, internal audit fosters good governance — especially when the effectiveness of board oversight is increasingly being questioned.