What Does a Fractional Chief Audit Executive Do?
As companies scale, take on institutional investors, or prepare for an IPO, the pressure to build a credible internal audit function grows quickly — but the economics of a full-time Chief Audit Executive often don’t make sense until the organization is larger and more mature. The fractional CAE model has emerged as a practical, flexible solution that gives companies access to senior audit leadership without the cost and commitment of a permanent hire.
What Is a Fractional CAE?
A fractional Chief Audit Executive is an experienced internal audit professional who serves in the CAE role on a part-time or project basis. The engagement is typically structured by days per month or by deliverable, and can range from a few days a month to near full-time depending on the company’s needs and stage of development.
The fractional CAE is not a junior consultant or a staffing placeholder. The role carries the same responsibilities as a traditional CAE: building and owning the audit function, engaging with the audit committee and executive leadership, setting the risk-based audit plan, leading audits, and presenting findings. The difference is scope, not substance.
Who Uses a Fractional CAE?
The fractional CAE model is most common in three situations. First, pre-IPO companies that need to demonstrate audit readiness and begin SOX scoping but are not yet large enough to justify a full-time hire. Second, recently public companies that have crossed the accelerated filer threshold and need to build a mature SOX program quickly. Third, private equity-backed companies where the portfolio company needs internal audit infrastructure either for compliance, operational improvement, or exit readiness, and where a full-time CAE headcount is not yet approved.
The model also works well for companies that have had a CAE departure and need interim leadership while a permanent search is conducted, or for organizations that want an objective, experienced voice on their audit committee without the overhead of a full-time function.
What Does a Fractional CAE Actually Do?
The work of a fractional CAE maps closely to what a full-time CAE does, scaled to fit the engagement terms. Core responsibilities include: developing and maintaining a risk-based internal audit plan aligned to the company’s strategic and financial risks; leading or overseeing individual audits and advisory engagements; building the documentation, methodology, and quality assurance frameworks needed to support the function; managing co-sourcing relationships with external audit firms or specialists; presenting audit results to the audit committee in a clear, board-level format; and owning the company’s SOX scoping, control documentation, and management testing program.
In smaller organizations, the fractional CAE may also directly perform audit work — testing controls, writing findings, and building the RCM — rather than just supervising it. In larger engagements, the fractional CAE takes more of a player-coach role, overseeing staff and co-sourcing partners while focusing on stakeholder management and quality.
The Audit Committee Relationship
One of the most important aspects of the CAE role — fractional or full-time — is the direct reporting relationship to the audit committee. The CAE exists to provide independent assurance to the board, not just to management. A fractional CAE should attend audit committee meetings, present findings independently, and be available to the audit committee chair outside of management’s presence.
This independence is critical. A fractional CAE who only reports upward through the CFO or Controller is not functioning in the CAE role — they are functioning as a consulting resource. The structure of the engagement matters as much as the quality of the work.
Fractional CAE vs. SOX Consulting
Companies sometimes conflate the fractional CAE model with SOX consulting or co-sourcing arrangements. The distinction matters. A SOX co-sourcer tests controls and provides documentation support. A fractional CAE owns the function, sets the strategy, and takes accountability for the quality and completeness of the program. The fractional CAE engages the auditor, manages deficiency classification, and represents the internal audit function to the board.
The fractional model can include SOX testing support — and often does — but the defining feature is executive ownership of the audit function, not just execution of individual tasks.
Is a Fractional CAE Right for Your Company?
The right fit depends on the company’s size, regulatory profile, and audit committee expectations. Companies with under $1B in revenue, fewer than 500 employees, or in the first two years post-IPO are often well-suited for the fractional model. The engagement can be scoped to start small and expand as the company’s needs grow, with the option to transition to a full-time hire once the function is established and the headcount is justified.
Veridian Advisory LLC provides fractional CAE services for companies building or maturing their internal audit and SOX programs. We work directly with audit committees and executive leadership to deliver experienced, independent audit oversight — at the right scale for where your company is today. Contact us to discuss whether a fractional CAE engagement is the right fit for your organization.
