Enhancing The Impact And Influence Of Internal Audit
9 approaches to meeting the needs of stakeholders.
How can your internal audit function meet the needs of stakeholders by providing not only assurance, but also advising and anticipating risk? We've outlined nine tried-and-true methods for increasing the impact and influence of internal audit.
Effectively responding to stakeholder needs
According to the findings of our 2016 Global Chief Audit Executive Survey, only 28% of chief audit executives (CAEs) believe their functions have a significant impact and influence in their organisations. Internal audit had little to no impact on 16 percent of respondents.
As a result, we've identified nine practised methods for CAEs to effectively respond to stakeholders' needs. As a result, internal audit's impact and influence will grow. These aren't magic bullets or quick fixes. They necessitate effort and dedication. They do, however, function.
- Produce and strengthen a brand identity. Simply put, your brand is what you are known for. What comes to mind in your organisation when the words "internal audit" are mentioned? Do they envision an innovative, value-added advisory team? Or is it something else? Change your brand to influence their thinking.
- Synchronize advisory activities to assurance work. If you want to provide more advisory services, you could start with senior management's goals and strategies for achieving them. However, this may appear overwhelming, especially if you are new to advisory services or are bogged down in assurance activities. Although you should always try to understand management's goals and strategies, there are other ways to get into advisory services.
- Provide cyber security services. As you've probably heard, it's not a matter of if, but of when your organisation will be hacked. As a result, cyber risks are at the top of the agendas of the board of directors and the audit committee. And they're likely to stay there.
- Examine the entire risk management function. Internal audit, as the third line of defence in risk management, is critical in providing assurance on the effectiveness of risk management activities performed by the first and second lines of defence. Risk management that is fragmented and siloed incurs costs, gaps, and redundancies, and can expose organisations to unanticipated risk consequences.
- Analyze the strategic planning procedure. Internal audit will often prompt the audit committee in many organisations to ensure that the board is fully engaged in strategic planning. It's a critical governance and oversight issue, particularly in terms of the data on which management relies, the models planners employ, and the assumptions management makes.
- Implement analytics. Internal audit can use analytics capabilities throughout the organisation to benefit virtually every department. Through more targeted, effective, and efficient audits, analytics directly leads to cost savings. It also allows for more time to be spent on advisory activities.
- Keep updating internal audit reporting. Because of outdated reporting methods, much of internal audit's work goes unnoticed. The right reporting enhancements will draw attention to that work and provide stakeholders with tangible evidence of change in internal audit.
- Strengthen your skills and abilities. We frequently see skill shortages or deficits as the root cause of internal audit's limited impact and influence. Given the changing needs of organisations, internal audit skills must evolve in order for the function to remain relevant.
- Enhance your personal impact. As an internal audit leader, your personal impact will set the tone and influence stakeholders' perceptions of the function. And having impact and influence does not only come from learning technical skills. They are also the result of effective communication, collaboration, leadership, and other interpersonal abilities.
The path to growing influence
With each improved process, lower cost, and better-managed risk, impact and influence grow over time. Focusing on the aforementioned areas propels internal audit up the value chain. Compliance becomes more efficient along the way, reporting becomes more relevant, and advisory becomes more credible, useful, and supportive.
We've seen time and again that when internal audit focuses its efforts on what matters most, its impact and influence are inevitably increased. So, align your internal audit vision with the organization's strategic vision, your resources with stakeholders' needs, and your professional approach with stakeholders' working styles.
The internal audit function aids an organization in protecting against both current and emerging risks, thus recalibrating the internal audit function is imminent to ensure risks associated with daily operations are properly managed. Assuring Consulting Sdn Bhd’s internal audit team offers a systematic, independent, and documented approach to examining internal controls through application of audit management system and data analytics tool to provide greater value to an organization.
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