Internal Audit of the Future
Internal Audit of the Future
Unprecedented change has created a new dawn for all of us at the sharp end of protecting our organisations. As internal auditors, our work has always been of fundamental importance to the survival and prosperity of any organisation.
However, we now need to look forward like never before as new risks emerge, established business landscapes shift and our working patterns are disrupted in real time. Even today, we look beyond financial risks and statements to consider wider issues such as reputation, growth, environmental impact, and the welfare of those around us.
But what will tomorrow look like?
It is safe to say that the days of looking backwards are history. Today we now look forward, identifying future risks and using that information for the benefit and protection of the whole organisation. And we are not just looking at the critical risks through an assurance lens – we interpret and advise on those risks, acting as business consultants to senior management.
To help us focus on future changes, we are highlighting five trends that will evolve over the next five years – five by five. In a series of articles, we will show how we believe our internal audit teams will change, how data, tools and technology will develop, and what our teams will be able to deliver as they help organisations not only survive but thrive in what will undoubtedly be a rapidly evolving and transforming, and equally uncertain and disrupted, time.
We can see some of these changes emerging already – they are being fast tracked as the result of the global pandemic or by rapid advances in technology. Some are being driven by regulatory change, while others by the demands of wider stakeholders – transformation, climate change, corporate responsibility and transparent governance are all shaping our worlds. The pace of change is going to be more rapid, and internal audit need to get their head around this.
So, as internal auditors, what can we expect in the next five years?
- Team selection: the skills pyramid will shift and turn on its head, with greater emphasis placed on new specialist skills and experience. Out will go the bottom edge of the pyramid as robotic process automation and the wider use of data analytics replace routine tasks, freeing up time for higher-grade, value-adding advisory work requiring a wholesale skillset shift. Co-sourcing teams and hybrid working will be firmly embedded, providing challenge and opportunity in equal measure.
- Digital drivers: now is the time to turn up the dial on the pace of adoption of data analytics and artificial intelligence-driven technology – which will deliver on their promise of real insight in real time. Not only will IA be in place to provide assurance over the robustness of the tools used, but it will allow for continuous auditing.
- New agenda: the IA remit, its scope and breadth, and speed of delivery, will be driven in new directions in response to growing stakeholder demands for transparency as well as the business imperative for risk management and mitigation. ESG will drive the agenda, but IA will provide crucial validation.
- Real virtual reality: dashboards will combine with virtual and augmented reality to provide immersive, informative presentations of all IA reports. Audit committee meetings delivered via headsets will not be a gimmick. The interactivity will allow opportunities to drill deeply into the data, allowing senior management and board members to make informed decisions.
- Regulatory reset: New regulatory requirements will see the C-suite turning to IA for necessary assurance - a possible UK version of Sarbanes-Oxley could require personal responsibility for internal controls. But will it end there? With the widening of reporting requirements into ESG terrain, assurance will be sought over these new areas, while standards will be enhanced over existing requirements.
Five years might feel like a long time ahead, but the pace of change is increasing, and many of these changes could happen comfortably within this time frame. But one thing is clear - the future of internal audit is taking shape now; it will be down to us to shape it in the future.
Heads of Internal Audit Newsletter
Every quarter, experts from our Risk and Advisory Services team write on issues affecting internal audit professionals. The articles provide Heads of Internal Audit as well as Internal Auditors with relevant insight covering topics such as risk management, internal controls and governance.