Internal audit departments might better demonstrate the value they bring to public companies if they had a more robust way of measuring their own performance.

That’s the conclusion of a recent report from the Institute of Internal Auditors as it continues to digest the findings of its 2015 global Common Body of Knowledge study. In a global survey of internal audit executives, IIA found two-thirds of audit departments measure their performance by reviewing the percentage of audit plan coverage. Nearly half focus on the timely closure of audit issues, and an equal number focus on the completion of mandated coverage.

Only one-third are concerned with the fulfillment of expectations of key audit stakeholders, and only a few more than one-third are assessing whether internal audit has satisfied client goals. Fewer than one-third of the survey respondents are measuring budget to actual audit hours, performance against the internal audit financial budget, the cycle time from the end of field work to the final report, or the cycle time from the entrance conference to the draft report, says IIA. Another 15 percent of executives said they had no formal process in place to measure internal audit performance.

“Identifying mutually agreed upon measures of performance between internal audit and its stakeholders is crucial to establishing internal audit’s value,” said Richard Chambers, IIA president and CEO, in a statement. “There is opportunity to improve when nearly one in seven organizations have no such measures in place.”

The IIA report suggests internal audit shops looking to establish better value for their work should collaborate with audit stakeholders to align audit performance measures against the organization’s top priorities. The report offers some suggestions on how to do that, beginning with learning stakeholders’ expectations by asking, for example, members of the board and audit committee. 

The IIA says audit executives should develop not only “inward-facing” measures that focus on how work is done internally, but also “outward-facing” measures that focus on the satisfaction of audit stakeholders. Based on survey results, audit executives currently are more focused on those inward-facing measures and not adequately focused on those measures that indicate stakeholder satisfaction with audit performance. Audit executives should implement tools and methodologies to measure performance, report results, and repeat the process at least annually.