Internal Auditing Around the World®

20th Anniversary Edition

Studying the cosmos has transformed our understanding of how planets, stars and galaxies form, and revealed deeper insights into the fundamental nature of the universe. Astrophysicists and cosmologists pursue this knowledge, in effect, by looking into the past. Using cutting-edge technology like that employed in the James Webb Space Telescope, they examine places that existed billions of years ago but whose light is just now coming into our view. This look into the past allows them to learn more about our universe today — and what its future may hold.

While grand, the profession of internal audit does not exist on the same scale as our universe. We believe the same principles and approaches can be applied to the universe of internal audit. There is much to learn from examining internal audit’s past — specifically, the last two decades — and applying this knowledge to propel the profession forward and enable our organisations’ success. It’s even more powerful if we can conduct this examination by employing some of today’s advanced technologies.

For this 20th anniversary edition of Internal Auditing Around the World^®, this is precisely what we have done.

Using our firm’s proprietary generative AI tool, we undertook a technology-driven review of the past 19 volumes in the series, which collectively contain 244 profiles of leading internal audit functions — an analysis of more than 460,000 words of commentary and insights.

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Topics

Internal Audit and Corporate Governance Digital Transformation Audit Innovation Technology Enablement Audit Transformation

What have we learned?

Peering into the past, what does the evolution of internal audit over the past two decades tell us?

Pointing our gaze toward internal audit’s transformation, our analysis reveals trends and lessons learned that fall into one of six categories.

Rise to relevance as strategic adviser: Internal audit has evolved from a compliance-focused function to one that serves as a strategically aligned and value-adding partner to the organisation. CAEs and their internal audit teams have expanded their roles progressively, delivering value beyond assurance services by providing strategic risk management advice and becoming integral in fostering enterprise risk management capability.
Value delivery: Underpinning internal audit’s rise to strategic adviser has been its ability to demonstrate and deliver high levels of relevance and value. The shift from a compliance and controls focus to a more wide-ranging mix of assurance and advisory services over the past two decades played a major role in the view of internal audit as a function providing sought-after strategic input.
Board engagement: Core to internal audit’s growth has been the effectiveness in which CAEs and audit leaders engage with the board, including the clarity, contextual relevance and value of the information and insights they provide. Internal audit’s advisory role has become more prominent as organisations navigate complex changes where boards appreciate internal audit’s objectivity and insights.
Technology and data enablement and focus: Technology has played an indispensable role in transforming internal audit from a compliance orientation toward serving as a strategic partner that delivers value for the organisation providing deep insight while also offering some foresight. Advancements in technology, particularly in data analytics, automation and, most recently, AI, have revolutionised internal audit’s work, increasing the efficiency, effectiveness and productivity of internal audits and expanding the function’s scope of work.
Diversity of talent: Demand has increased for diverse skills on internal audit teams, including data analytics proficiency, AI and machine learning capabilities, and soft skills with a focus on effective communication, critical thinking and problem-solving. Leading internal audit functions also focus more on recruiting candidates from diverse backgrounds and championing rotational and similar programmes.
Catalyst for change and resilience: Best-in-class internal audit functions have learned to act as catalysts for change by providing insights that drive improvement and help their organisations capture opportunity while also safeguarding against downside risks. They have transformed the perception of internal audit from a cost center to a valuable partner that contributes significantly toward achieving organisational resilience and strategic objectives and can help enhance organisational value as well as protect it.

Future Ready internal auditors will serve as a guiding star, steering organisations toward a resilient and adaptive future.

Andrew Struthers-Kennedy

Global Leader, Internal Audit & Financial Advisory

Launch time — our vision for the future of internal audit

In our view, there are five key actions to take today for internal audit to launch successfully into a dynamic tomorrow and grow as a strategic adviser to the business.

Prioritise transformation: Despite advancements achieved by best-in-class internal audit functions, many organisations continue to perceive internal audit as a compliance or assurance function, and many internal audit groups operate with a similar mindset. This needs to change. CAEs and internal audit teams need to be in tune with business trends, changes in focus and evolving risks; nimble; technology-enabled with access to data; and positioned to be a strategically focused and relevant partner in providing value-centric perspectives to the board and C-suite.
Lean on technology: Technology drove extensive transformation in internal audit over the past decade. CAEs and internal audit leaders should drive further investment into their functions, exploring the integration of new and emerging technologies into their auditing activities. It’s important to view technology not solely as a tool but rather as an integral part of evolving audit practices.
Cultivate talent: Without high-performing professionals who can tackle complex audit matters and bring a strategic focus to the table, it will be difficult to transform internal audit’s value proposition. It’s a brave new world, and it takes evolving expertise and new ways of thinking to flourish in it.
Adopt an innovation mindset: A bold commitment to elevate internal audit’s relevance and value proposition, embrace change, and improve continuously is the hallmark of best-in-class internal audit functions. Internal audit has a vital role to play in innovating within its function as well as supporting transformation and enhancements to resilience throughout the enterprise.
Act as a strategic partner — collaborate and communicate: Meeting and exceeding expectations is the key to success. Ensuring greater alignment between what board members and C-suite leaders seek from internal audit and what internal audit prioritises should be the focus of every CAE. It should be the goal of every internal audit leader to be a voice that is sought out for input and advice.

Gazing into the past, we have seen the developments and trends that have shaped the internal audit profession over the last 20 years. The best-in-class internal audit functions from around the world that we have profiled are to be commended for their willingness to be bold and for their commitment, progress and achievements in driving success in their organisations. In many ways, it was their courage, willingness to innovate and clarity on what was needed to thrive that fueled where they are today. And we know that many other internal audit organisations have experienced similar success.

Infographic | Internal Auditing Around the World®

An illustration of the evolution of the internal audit profession following the passage of the COSO Internal Control – Integrated Framework more than 30 years ago, and the Sarbanes-Oxley Act over two decades ago.

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