Building Internal Audit’s Relevance
CAEs and internal audit leaders view high-impact reporting – and more broadly, impactful communications – as the top driver to establishing and building internal audit’s relevance with the board, senior executives and other stakeholders. Producing impactful communications is the culmination of numerous activities and capabilities performed throughout the internal audit lifecycle. Developing relevant, risk-informed, concise, timely and insightful reports and communications requires getting the right talent, technology systems, data access and analysis, methodologies, and governance mechanisms into place and working together.
Which one of the following areas do you believe contributes MOST to making an internal audit function relevant?
What our research reveals
There is a clear push for the internal audit function to align with other assurance functions in the organisation. The top three priorities for internal audit groups over the next 12 months are:
- Evolving how the internal audit function coordinates and aligns with other assurance functions;
- Creating an internal audit strategy that is better defined and aligned to the overall organisation; and
- Increasing the use of data and analytics solutions throughout the internal audit lifecycle.
Higher-maturity internal audit functions are focused on continuing to evolve and adapt and have clearly articulated strategic plans
The top two areas viewed to contribute most to making internal audit relevant are (1) using high-impact reporting to deliver and communicate value, and (2) upskilling resources and talent to deepen and diversify team member competencies. There is a clear priority for resources to be upskilled, across all domain areas. With a tendency to sometimes over-focus on technical skills, it’s important to not lose focus on upskilling in so-called softer skills – like communications, teamwork, problem-solving, time management, leadership and emotional intelligence – in addition to the pursuit of upskilling in technical areas such as data and advanced analytics, automation and other technologies, and regulations.
The use of enabling technologies combined with advanced analytics is viewed as a significant contributor to achieving relevance. Many internal audit leaders are organizing analytics and enabling technology efforts under the same initiative, thus it makes sense to view these results together when assessing the areas that contribute most to making an internal audit function relevant.
Internal audit functions that rate themselves at higher maturity levels on our Next-Generation Internal Audit scale are more likely to rely on high-impact reporting to deliver and communicate results.
CAEs and Audit Directors who believe evolving how the internal audit function coordinates and aligns with other assurance functions is a top transformation priority.
CAEs and Audit Directors who view competing priorities as a barrier to innovation and transformation.
What are the top transformation priorities for your internal audit organisation for the coming 12 months? (Multiple responses permitted)
Relevance-related issues also rate among the most pressing obstacles to innovation and transformation in the internal audit group. Two out of five CAEs have a significant level of concern that their function’s lack of perceived value among stakeholders inhibits its ability to focus on innovation and transformation projects and initiatives.
What are the barriers or inhibitors to increased focus on innovation/transformation? (Multiple responses permitted)
There is no silver bullet or overnight solution to enhancing the internal audit function’s relevance or perception of value delivered. Focusing on impactful communications is important, but it should be done in conjunction with elevating the maturity of other key governance capabilities – especially internal audit’s strategic vision and assurance alignment as well as its overall structure. In cases where internal audit is not perceived as a function delivering relevant insights or value, internal audit leaders need to understand clearly where the misalignment is occurring (e.g., team member skills, business acumen, project scoping, execution, reporting, etc.) and then prioritise and diligently work to address those.
Finally, in this survey, we evaluate the results through the dual lenses of relevance and transformation priorities. While there is a close relationship as we review results through these two lenses, the correlation is not one hundred percent. This could be for a number of legitimate reasons – including that transformation initiatives may not be directly tied to increasing relevance, or they do not have relevance explicitly considered, or that internal audit is already operating at levels of relevance and value that are assessed as being “high,” or any number of other reasons.
We encourage internal audit leaders and practitioners who are reviewing these survey results to consider the priorities that have been identified in the context of their own organisation, internal audit function, capabilities and transformation goals. In our view, the goals of increased relevance and value should be strongly considered as core components of the transformation activities internal audit functions are undertaking.
Explore the results of our research
Survey Methodology and Demographics
Protiviti conducted its global 2023 Next-Generation Internal Audit Survey online from November through December 2022. More than 550 internal audit leaders and professionals (n = 573) completed the survey questionnaire, two-thirds of whom reported as a CAE or Audit Director.