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.