Audit report card: More internal audit teams suffered cuts in 2025

Internal audit leaders in an annual survey reported staff and budget cuts in 2025 that rivaled levels observed during the 2008–2009 financial crisis, but they also shared a potential key to organizational support of the audit function.

Eighteen percent of 373 internal auditors surveyed for the 2026 North American Pulse of Internal Audit report said their staff size decreased in 2025 — up from 11% in 2024 and just shy of the 19% figure recorded in 2009, the second year of the survey. Nineteen percent said their organizations’ budget for internal audit decreased in 2025 — up from 11% in 2024 and surpassed only by the 2020 pandemic (36%).

While the 11% rates observed in 2024 were among the lowest in the history of the survey, making some level of increase for 2025 more likely, the 2025 numbers are eye-catching in a year in which artificial intelligence (AI) took more of a foothold in the workplace.

However, respondents signaled that real connectivity could hold the key to keeping internal audit teams supported.

The power of strategic alignment

AI can’t replace everything.

Among audit leaders who considered their function to be fully or almost fully aligned with organizational strategy, 59% reported that their department funding was mostly or completely sufficient. By comparison, among audit leaders who considered their function only somewhat aligned with organizational strategy, just 29% reported that department funding was mostly or completely sufficient. Overall, 30% of audit leaders described their function’s funding as “not sufficient.”

There remains room for further strategic alignment within organizations: While 59% of audit leaders considered their function to be fully or almost fully aligned with organizational strategy, 37% considered themselves somewhat aligned and 4% considered themselves minimally or not aligned.

Eighty-six percent of audit leaders worked at an organization with the equivalent of 1 to 24 full-time auditors. Fifty-seven percent of their organizations had 5,000 or fewer employees.

Extremes in the equation

Specifically among financial services organizations in the survey, 2025 was a better year. Just 9% said their organizations’ budget for internal audit decreased — less than half the rate of the full survey population.

At the other end of the spectrum, 28% of privately held companies not in financial services suffered a budget decrease. The story with staffing was similar, with 10% of financial services organizations reporting a decrease compared with 28% of private companies not in financial services.

Sixty-nine percent of audit leaders in the financial services industry reported they were fully or almost fully strategically aligned with their organization, the highest rate among nine sectors studied. Private companies not in financial services came in third at 62%, just behind educational services (63%), while manufacturing (47%) was the lone sector below 50%.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.