It’s not just regulators or professional associations calling the internal audit profession to transformation. Even chief audit executives in the trenches recognize the internal audit function needs to evolve to remain relevant.
That’s the conclusion of a recent Deloitte study that surveyed 1,200 CAEs worldwide to get a pulse on the state of internal audit. “We were surprised -- very surprised -- that only 28 percent of the CAEs who completed the survey globally believed their internal audit function had a strong impact within their organizations,” says Terry Hatherell, internal audit leader for Deloitte globally. “Another 16 percent of CAEs who participated believed their internal audit function is having little to no impact or influence in their organization.”
The poll revealed a number of areas where internal audit leaders recognize they need to make changes or improvements to meet modern and rapidly evolving business needs, says Hatherell. “One area is securing the skills and capabilities required,” he says. “Only 41 percent are satisfied with the skills and capabilities within their department.” Only 24 percent of CAEs said they are missing key skills necessary for fraud prevention, but 42 percent said they need more skills in specialized IT, and a similar number need more skills in data analytics.
Exacerbating the problem, the majority of CAEs believe their budgets will remain stable over the next three to five years, making it more challenging for audit leaders to address skill gaps, says Hatherell.
The findings raise concerns about the future of the profession, says Hatherell, and represent a kind of directive to forge a new path. "Internal Audit plays a critical role in effective corporate governance within an organization,” he says. “The apparent lack of impact and influence is very surprising and represents a very clear call to action for change."
The results also suggest CAEs are aware of this need and are taking measures to address it. Respondents said they plan to increase their use of dynamic reporting to better drive key messages to audit stakeholders, and more than half said they expect to provide more insight-driven advisory services to their organizations. More than one-third of CAEs said they expect risk anticipation and data analytics to have the greatest effect on internal audit in the coming three to five years.