How does internal audit add value?
25 January 2021
In a recent article written by Richard Chambers, the president and CEO of the global Institute of Internal Auditors (IIA), he stressed that internal audit should “obsess about the value they deliver” whilst avoiding simply “checking the box in executing their mission”. With that in mind, we ask the question: how does internal audit add value, and how can audit teams effectively communicate this to the board and senior leaders?
Certainly, the internal audit profession has made great strides in the past several years with regards to being viewed as critical to the success and stability of any organisation. And in an onslaught of increased risks and new challenges brought on by the global pandemic, never has this been more apparent.
Whilst it is imperative for internal audit to be operationally sound and working like a well-oiled machine, the key stakeholders are far more interested in the value that it generates for them.
The challenge, then, for audit professionals is to not only build from their previous progress and learnings but also continue to demonstrate a clear strategy for the future.
How internal audit teams can maximise their value
Attracting the attention of the leadership team is no mean feat for internal audit. Especially with a range of stakeholder priorities to consider – from a focus on governance processes through to assessing broader risks such as cybersecurity and, more recently, crisis response.
Here are 4 ways internal audit departments can add value to their organisation:
Identify competitive advantage
Is something working particularly well in your organisation where internal audit has been the driving force towards improvement? Perhaps you have an unparalleled client retention rate or an innovative sustainability strategy that is providing multiple benefits to the community.
Internal audit professionals can identify these strengths easily through audit management software and communicate them to the senior leadership team to help the organisation achieve competitive advantage.
Embrace a risk-based methodology
Internal audit benefits from a unique view across all areas of a business to understand how the processes fit together from one department to the next.
Whilst it is key for auditors to provide in-depth insights when it comes to risks, this must go beyond simply looking at those that are most immediate, to also consider those that are new and emerging. By working in an agile manner to continually identify threats and weaknesses in high-risk areas, internal auditors can prevent both costly mistakes and reputational damage.
Influence core business metrics
Keeping track of the core business metrics such as efficiency, risks, waste, profitability, and compliance for leadership to view on a real-time interactive dashboard is one of the most effective ways internal auditors can demonstrate how they are influencing the organisation over a period of time.
From this dashboard, senior leaders can drill down into trends, performance and most importantly, see how the internal audit function is helping to stimulate positive change in the business.
Collaborate with key stakeholders
Regular interaction with stakeholders is essential to understanding what senior leaders expect, their core objectives and what they perceive as risks. The input from this collaboration is critical when putting together an audit strategy as well as the approach to monitoring, risk assessments and audit scope.
Besides, by garnering consensus on certain issues from stakeholders, it is far easier to harmonise the audit process and meaningfully impact the control environment.
Getting the voice of internal audit heard
In an age of agile auditing, it’s clear that internal audit professionals need to shout more about their successes as well as be willing to be disruptors in their organisation i.e., asking the difficult questions and calling out any issues that they uncover.
Whilst senior leaders may well see value in a multitude of individual audit reports, they may not always connect the dots and so the onus must be on auditors to shine a light on all achievements - big and small. After all, creating awareness of internal audit simply comes with the territory.
It also cannot be understated the importance of building relationships with stakeholders to discover what makes them tick. Just as you would approach risk assessments, fostering trust and communication with leaders should be an ongoing activity as their needs and expectations evolve over time.
Discover more about the importance of internal audits and ensure your organisation’s leadership team no longer ask, ‘how does internal audit add value' with our latest whitepaper: Agile auditing for a post-Covid-19 world.