Internal audit departments continue to wrestle with how best to keep up with the rapid pace of change in the business environment, according to the latest survey result from PwC.
The firm’s annual poll to assess the state of the internal audit profession found nearly 70 percent of organizations say they are going through or have recently gone through a significant transformation in the business, such as entering new markets, overhauling information technology, or entering into a merger or acquisition. Yet only 11 percent of chief audit executives believe their current internal audit functions provide value-added services and proactive advice to the business, although 60 percent of CAEs said they hope to get there in the next five years, the result say.
The annual survey gathered the views of some 1,300 internal auditors and others who have a stake in the success of internal audit. The results say business is going through big challenges like regulatory complexity, data security and privacy issues, cost pressures, talent availability, and government policy changes, but those changes are creating big opportunities like changing consumer behavior, shifts in competition, and emerging technology.
“As companies evolve and transform, senior management and boards are looking for internal audit functions to be actively involved in business imperatives and offer proactive perspectives on all business risks,” says Jason Pett, internal audit services leader for PwC.
The survey results suggest the time has come for internal audit departments shift their way of thinking from where they are to where they should be, says Pett. “Then internal audit needs to point that strategic vision to where they should be rather than where they can be or where they are,” he says.
Making such a shift requires internal audit to focus on some key questions, he says, including what risks the internal audit function should be addressing, what talent is necessary to do so, and what technology internal auditors should leverage. The survey suggests less than half of internal audit teams use analytics for scoping decisions or to drive the risk assessment.
Pett says in the past few years, he’s seen analytics being shifted higher into the audit life cycle. “It was limited primarily to audit execution and field work, but now we see analytics shifting certainly into audit planning, and even earlier into risk assessments,” he says, but not across the entire profession.