Internal audit transformation is on the rise, but gaps remainStaffs are working above capacity, so more skill is needed.
The amount of internal audit functions going through transformation and innovation initiatives is rising. Some of that change was forced upon internal audit by a pandemic-fuelled change in working models, but that transformation is helping to make internal audit a more visible, valuable cog in organisations.
Nearly three-fourths (74%) of audit executives surveyed by global consulting firm Protiviti said their internal audit department has completed or is undergoing transformation or innovation initiatives, and 70% say the focus on such changes has grown in the past year.
The percentage is higher among larger organisations, but Protiviti's data shows that even a majority of smaller entities have made a commitment to internal audit transformation.
Protiviti used the responses of more than 500 internal audit leaders and professionals around the world. It said that the amount of respondents overall (professionals and executives) who said that innovation was happening or was about to rose 6% compared with last year.
In addition to leading more transformation or innovation initiatives, 52% of those who hold the title of chief audit executive or director of auditing say that such changes have a medium or high level of return on investment.
These changes can help grow the profile and maturity level of companies' internal audit functions. For some organisations, there is still work to be done on that maturity.
Almost half of audit executives, 47%, said that no formal innovation structure existed for internal audit but that the function actively encourages innovation and the exploration of new and better ways of delivering. That was the most common response the audit executives chose of five statements that best defined internal audit maturity. The statement that indicated the most maturity — "Innovation is defined as a core value for the internal audit function with an appreciation of and focus on continuous involvement to long-term success" — was picked by 18% of audit executives.
One path that organisations are taking to advance innovation and transformation initiatives is through training and development of current staff. Protiviti warns that this should not be the main approach, in part because existing employees in internal audit have been working at or beyond capacity over the past two years. Given that reality, Protiviti said in the survey report that "acquiring skills and expertise from other sources can be highly beneficial."
— To comment on this article or to suggest an idea for another article, contact Neil Amato at Neil.Amato@aicpa-cima.com.