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25 August 2016

How can internal auditing be maximised in the 21st century?

By Tom Ryan

The widespread development of internal auditing systems has helped reduce risk, increase productivity and improve control. A recent study carried out by The Institute of Internal Auditors (The IIA), and supported by The Global Internal Audit Common Body of Knowledge (CBOK) raised an interesting topic concerning the maturity of Internal Audit departments.

The report, Benchmarking Internal Audit maturity, helps internal auditors of the 21stcentury build strategies to bridge the gap between expected and realised internal audit quality. The findings show whether and how much you can rely on your internal auditing department services. Results are being used to help principle stakeholders make decisions on their internal auditing systems, such as Ideagen Pentana.

The report concludes with different indictors, and how they affect the risk and strategic planning within the internal audit department. It was found that while there is high proportion of these departments that are fully or almost fully aligned with the strategic plan, the highest ones being in Latin America and the Caribbean at 70%, there is also a substantial proportion below that with the lowest being South Asia at 42%. These results are interesting and suggesting that the regions that have more recently adopted theWestern practice of internal auditing are following their strategic plan more closely, and may also link to the wealth and development of the country.

The size of the department was one of the strongest indicators for how efficient and aligned an internal audit department can be in the modern world. The percentage of alignment with the strategic plan increases as the number of full time equivalent employees increases up to 299. After this number the percentage of strategic alignment drops, creating an inverted U shape. When analysing these findings, it was found that a very small or very large internal audit department didn’t maximise its productivity and efficiency.

So how can internal audit be maximised in the 21st century? CBOK suggests that a robust performance management system that includes multi-dimensional KPIs, regular benchmarking, and stakeholder satisfaction are important elements of improvement (QAIP). Moreover, the IIA also recognises the significance of technology in the entire audit process to increase efficiency and effectiveness whilst obtaining broader risk assessment coverage, including data mining and analysis tools. Finally, the report recommends to build in elements of continuous or real-time auditing for increased productivity and effectiveness.

How can we help?

Ideagen Pentana is a complete solution for risk based auditing. The software is the result of 25 years of supplying systems which optimise audit productivity, compliance and provides high quality, timely management information. The flexible deployment service helps overseas prospects and businesses to adopt the Pentana software and use the integrated, ready to use risk and control framework. What’s more, the software is flexible for all types of internet connections, for example Pentana can be used offline as well as with slow networks which helps connect isolated and remote areas.

Thanks to seamless integration with Arbutus Software’s analytics and continuous monitoring technology, Pentana offers you the complete audit management system for 21stcentury auditing.

If you’re looking to maximise your internal auditing efforts and increase efficiencies and effectiveness of your IA department, contact us today to request a personal demo of Pentana.

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