Top-performing internal audit groups share similar traits – They focus more on streamlined, tailored, impactful communications and reporting, they evolve and adapt routinely, and they push themselves to find and build talent and resources from both within and outside their organisations.
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Impactful communications, along with the methodologies, data and systems required to produce them, are the most important contributor to growing internal audit’s relevance – Efficacy of communications and reporting requires the optimisation of activities throughout the audit lifecycle, including risk assessment, scoping/planning, audit committee reporting, and issue follow-up and validation.
Competing priorities are the greatest barrier to internal audit innovation – Perhaps not surprisingly, this is the case across different groups of survey respondents, Next-Generation Internal Audit maturity levels and other segments. For organisations struggling with these challenges, it may be of comfort to learn they are not alone. Of note, far fewer respondents report a lack of executive and board support to be a barrier to innovation and transformation (see below), meaning internal audit leaders should ensure they are communicating their concerns and challenges around talent and competing priorities through their executives and board reporting channels. All audit committees should be routinely asking internal audit leaders questions such as, “Do you have the resources you need?” and “Is there anything stopping you from focusing on priority items, near- or long-term?” Internal audit leaders should be prepared to answer these questions directly and thoroughly, and with relevance and value as the frames of reference.
Next-Generation Internal Audit Enabling Technology maturity levels continue to lag – Though there are some improvements in the results, overall maturity levels in Enabling Technology competencies, including advanced analytics, automation and process mining, continue to lag reported skill levels in Governance and Methodology components such as aligned assurance, strategic vision, agile audit and dynamic risk assessment.
Access to talent, especially technology skills, is a major challenge requiring innovative approaches – Fewer than six in 10 internal audit functions, on average, have access to the talent they need across any of the 12 Next-Generation Internal Audit competencies. CAEs view the ability to recruit qualified candidates and retain their people as their top HR-related concerns.
The board and C-suite support internal audit’s innovation agenda – There is strong executive management and board support when it comes to acquiring or developing the necessary talent and skills related to Next-Generation Governance, Methodology and Enabling Technology capabilities in the internal audit function. Perhaps not coincidentally, when it comes to innovation and transformation barriers, significantly fewer CAEs view executive and board support as an inhibitor compared with competing priorities (as noted above) and lack of budget. This underscores our prior research and findings noting that the board and C-suite want internal audit functions to focus on innovation, transformation, and improving their capabilities with technology and processes.
Fewer than six in 10 internal audit functions have access to the talent they need across any of the 12 Next-Generation Internal Audit competencies.
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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.