Internal auditors are making inroads in their quest to deliver more value to companies, but recent research from the Institute of Internal Auditors suggests they may be able to do more to deliver meaningful insights into organizational risks and opportunities.
The IIA and Deloitte & Touche surveyed more than 350 chief audit executives, board members, and senior management in 39 countries to get a sense for whether internal auditors are delivering insights on risks and opportunities that are valued by corporations. Approximately 90 percent of internal audit executives agreed that internal audit should provide this expertise, but a smaller share, 72 percent, agreed or strongly agreed that internal audit functions generally provide such insight.
The research sought to explain not only the current state of the profession in terms of delivering insight, but also the drivers or the obstacles to help chief audit executives consider how they can improve. The research identified five key factors that are consistently associated with keen insight delivery on the part of internal auditors.
They include a strong control environment and tone at the top, clear expectations from management and the board for internal auditors to deliver valuable insights, a reporting relationship that establishes and supports a measure of independence for internal auditors, a competent chief audit executive, and an IA team with skills and industry or organizational knowledge to create a tie between the audit process and the management of risks.
Study co-author Patricia Miller, who is an internal audit partner for Deloitte, said in a statement that the study provides a critical take-away message for every chief audit executive. “You have to be proactive, well-informed, articulate, business- and management-knowledgeable, and sometimes a courageous leader to demonstrate insight delivery to your stakeholders,” she said.
The report recommends some suggested next steps for chief audit executives. Meet with your stakeholders routinely, and consider the importance of reporting relationships and sufficient organizational independence, the report suggests. Also, align the internal audit mission and focus with the agreed expectations, and refocus the internal audit approach to agree with the mission.