There is a common joke among physicists that fusion energy is 30 years away … and always will be. You could say something similar about artificial intelligence (AI) and robots taking all our jobs. The risks of AI and robotics have been expressed vividly in science fiction by the likes of Isaac Asimov as far back as 1942 and in news articles and industry reports pretty much every year since. “The machines are coming to take your jobs!” they proclaim. And yet, all of us here at Audit International still head to the office or log in from home each weekday morning.

The reality is less striking but potentially just as worrying. Most people expect that one day some sort of machine will be built that will instantly know how to do a certain job—including internal auditing—and then those jobs will be gone forever. More likely, is that AI and smart systems start to permeate into everyday tasks that we perform at work and become critical parts of the business processes our units and companies conduct. (Indeed, many professions and industries have already been greatly disrupted by AI and robotics.)

Technology companies have been so successful over the last 30 years because of the common mantra of “move fast and break things.” And that was maybe just about acceptable when it meant you could connect online to your friend from high school and find out what they had for breakfast or search through the World Wide Web for exactly the right cat meme with a well-crafted string of words.

When the consequences now might mean entrenching biases in Human Resources processes, or mass automated biometric surveillance, not to mention simply not even understanding what a system is doing (so called ‘black boxes’), the levels of oversight and risk management need to be much higher.

The Regulatory Environment :
There is some existing regulation which covers aspects of this brave new world. For example, in the European Union, article 22 of the General Data Protection Regulation (GDPR) on automated individual decision-making, provides protection against an algorithm being solely responsible for something like deciding whether a customer is eligible for a loan or mortgage. However, the next big thing coming to a company near EU is the AI Act.

The proposal aims to make the rules governing the use of AI consistent across the EU. The current wording is written in the style of the GDPR with prescriptive requirements, extraterritorial reach, a risk-based approach, and heavy penalties for infringements. With the objective of bringing about a “Brussels effect,” where regulation in the EU influences the rest of the world.

Other western jurisdictions are taking a lighter touch than the EU, with the United Kingdom working on a “pro-innovation approach to regulating AI,” and the United States’ recent “Blueprint for an AI Bill of Rights” moving towards a non-binding framework. Both have principles which closely match the proposed legal obligations within the AI Act, hinting at the impact the regulation is already having.

Much of the draft regulation is still being discussed, with a final wording soon to be agreed. There are disagreements across industries and countries on whether some of the text goes far enough or goes too far. For example, whether the definition of “AI” should be narrowed, as the current wording could encompass simple rules-based decision-making tools (or even potentially Excel macros) or even expanded to greater capture so-called “general purpose AI.” These are large models which can be used for various different tasks and therefore, applying the prescriptive requirements and risk-based approach of the AI Act can become complex and laborious.

The uncertainty over the final wording has given companies an excuse to not make first moves to prepare for the changes. Anyone who remembers the mad rush to become compliant with the GDPR will remember the pain of leaving these things to the last minute. The potential fines, which may be as high as 6 percent of annual revenue depending on the final wording, could be crippling and have a cascade effect on a company’s going-concern.

What Can Internal Auditors Do?
As internal audit professionals we can start the conversation with the business and other risk and compliance departments to shine the light on the risks and upcoming regulations which they may be unaware of. It is our objective to provide assurance but also add value to the company and this can be done through our unique ability to understand risks, the business, and provide horizon scanning activities.

Performing internal audit advisory or assurance work, depending on the AI risk maturity level at the organization, can highlight the good practice risk management steps that can be taken early to help when the regulation is finalized. These steps could include:

1) Identify AI in Use: To be able to appropriately manage AI risks throughout their lifecycle stakeholders need to be able to identify systems and processes which make use of them. Agreeing on a definition of AI and developing a process to identify where it is in use is the first step. This would include whether it is being developed in-house, is already in use through existing tools or services, or acquired through the procurement process.

2) Inventory: Developing an inventory which includes information such as the intended purpose, data sources used, design specifications, and assumptions on how and what monitoring will be performed is a good starting point and can be added to, based on your company’s unique characteristics and any specific legal requirements that are implemented in the future.
3) Risk Assessments: Since a key aspect of the AI Act is it being “risk-based,” it is important to have a risk assessment process to ensure you take the necessary steps as required in the regulation, based on the type of AI used. For example, what level of robustness, explainability, and user documentation is necessary based on the risk tier provided. It is also important to consider the business and technology risks of using the AI. For example, machine learning using neural networks requires large training datasets, which can raise issues of data protection and security, but may also perpetuate biases that are contained in the datasets. Suitable experts and stakeholders should be involved in the development and assessment of the risk assessment process.

4) Communications: One area that is often forgotten is communication. It is all well and good having a policy or a framework written down but if it isn’t known and understood by the relevant stakeholders it’s worth less than the paper it’s printed on. Involving key stakeholders during the development of your AI risk management processes can help develop a diverse platform of champions throughout the business who can act as enablers as the requirements are communicated and regulation finalized.

5) On-going monitoring: Risk management is not a one-off exercise and this is no exception. Use cases, technology, and the threat landscape change over time and it is important to include a process for on-going monitoring of AI and the associated risks.

The machines may not be coming to take our jobs just yet, but the risks are already here and so are the opportunities to get ahead. There may be a long and winding road in front, as we all prepare for a world where AI is commonplace and new regulations and standards try to shape its use, but each journey starts with a step and it’s never too early to get going.

“Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
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As the threat of climate change mounts, Audit International know that businesses must take steps to counter its damaging effects. This is in order to meet ambitious government Net Zero targets, which aim to halve emissions in a little over a decade.

The promising news is that the majority of organisations now understand that sustainability must be made a priority when it comes to devising their overall strategy.

However, companies are often left in the dark as to how best to report on their ESG credentials in a way that’s impactful and means something to shareholders and other stakeholders. It’s clear that what’s needed is a uniform set of standards for measurement and reporting, just as there is for financial performance. This is particularly prevalent in the Accounting sector, where calls are increasingly being made to introduce universal and transparent ESG standards.

However, the world of sustainability reporting is a confusing and often disparate mass of names and frameworks. They include the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD).

The good news is that a forerunner has emerged that promises to offer a single source of truth when it comes to ESG reporting. It is called the International Sustainability Standards Board (ISSB). The ISSB will do for sustainability reporting what the International Accounting Standards Board (IASB) does for financial reporting. That is, develop standards for companies to report their performance to investors. Both will be under the International Financial Reporting Standards (IFRS) Foundation umbrella.

Where did the new framework originate and what exactly is it?

Created at 2021’s COP26, ISSB will provide a global baseline for high-quality sustainability reporting that supports the work being done in the US by the Securities and Exchange Commission (SEC) and the European Union (EU)’s Corporate Sustainability Reporting Directive (CSRD).

The ISSB is focused on ‘single materiality’ or the ESG information that drives valuation and matters most to investors. This is also the focus of the SEC and so the mandates are consistent. In contrast, the CSRD has a broader ‘double materiality’ mandate, which means it will cover information of interest to stakeholders, even if it is not of interest to investors. Linking the two is the concept of ‘dynamic materiality’, meaning that more light can be shed on ESG issues – such as climate change – moving forwards.

The ideal outcome is that ISSB becomes a global standard which integrates the work of all previous standards and frameworks focused on investor needs. Ideally, the SEC and EU can use its standards. The EU can then top these standards up with those covering double materiality. As dynamic materiality makes these relevant to investors, the ISSB can then take over responsibility for the standard setting process.

How can ISSB success be achieved?

The corporate community has a key role to play in ensuring the success of the ISSB. Investors are increasingly demanding information on a company of interest’s sustainability performance. At the same time, companies are increasingly being accused of greenwashing their sustainability reporting by making it appear more environmentally sound than it is.

Having standards, with proper audits, addresses both issues. That said, it’s important to note that standards aren’t targets for issues like carbon emissions or diversity and inclusion. Rather, they provide credible information on the reporting done by a company on its progress in achieving whatever targets it decides to set, if any.

While ensuring that ISSB is a success, companies can also take steps to secure their own long-term viability. The first way is to participate in the standard setting process. As with financial standard setting, exposure drafts for proposed standards will be published in the public domain. Companies need to join investors in providing their input, including constructive critiques. If a company has an opportunity to participate in any advisory councils and working groups or share its views in comment letters, it should make the effort to do so.

The second approach is to proactively adopt these standards. There will be an inevitable lag between when the standards are published and the country in which the company is headquartered making them mandatory. However, those who wait will likely lose out.

As some companies quickly adopt ISSB’s standards, investor pressure will mount for others to follow suit so they can compare companies’ performance and do their own analysis. Failure to report won’t give a company the benefit of the doubt. Rather, investors will likely assume the worst, all to the possible detriment of the company’s stock price.

Ultimately, the ISSB will make life better for any company which cares about having a sustainable, long-term corporate strategy. Therefore, companies should give their full support to make these standards the best and most accurate they can be.

​“Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
Calling
– Switzerland 0041 4350 830 59 or
– US 001 917 508 5615
E-mail:
– info@audit-international.com”

Having considered how internal audit can address environmental risks in the first article in this Audit International series, this article turns to the second element of ESG, social risk. This can be a sensitive area, and many risks are hard to quantify. But over the last decade, expectations of organizations have evolved significantly, and internal audit has a key role in providing assurance over the risks that this presents.

Social risks :
Social risk can be viewed from several perspectives. While we traditionally look at business activities, here it can also be helpful to look through the lens of different stakeholders to ensure all risks are captured and completely understood. For example, consider impacts on the organization itself, staff, customers, suppliers, investors, other third parties, and the wider communities in which you operate. Below are some of the key risks – not an exhaustive list — but those that outline the main risk areas you will want to capture:

– Health and safety – consider both workplace and customer safety.
– Labor standards – your own and those throughout your supply chain. This goes beyond compliance with legislation and international protocols to include issues such as well-being, benefits, and employee engagement.
– Equality, diversity, and inclusion (EDI) – very important to staff, customers, and the community, this is a significant topic in and of itself
– Sales practices – important to your customer base and the wider community, poor practices can quickly damage a reputation.
– Data privacy – sometimes considered a social risk, given its impact on staff, customers, and other partners.
– Community engagement – how effective is your organization in working with local (and broader) stakeholders to maximize the positive and minimize the negative impacts on the community. This started with CSR (Corporate Social Responsibility) but often goes much deeper.
– Other broad, but important, issues such as human rights and the rights of indigenous peoples.
– Typical impacts for the organization will be the same as for many other ESG risks – reputational, legal and regulatory, financial, operational, and ultimately strategic. Other than potentially using different stakeholder perspectives when considering risks, this fits well into your risk assessment process.

Getting started – Determining the key risks :
Your risk assessment should always be the starting point. In order to do this, you will first need to go through several steps to get sufficient background context:

Understand your organization’s approach to social risk. Given the variety of risks and the number of stakeholders, it is likely that it will sit across the organization with many different risk owners. For example, staff-related risks and issues will be owned by Human Resources, whereas supply chain risks will be owned by the relevant business unit or a procurement function. Are there anywhere these risks are also considered and assessed together or across the organization, such as part of a risk function?
Consider who the key stakeholders are. Some will be common to all organizations – staff and customers for instance. Others will be specific to your business – such as a community close to a quarry.
As always, consider key sector and industry risks, drawing on industry guidance, frameworks, and other resources, and on standards such as GRI (Global Reporting Initiative).
Pay attention to your supply chain, particularly if sourcing (directly or indirectly) from jurisdictions where labor or safety standards may not reflect those in your home country.
Understand legal and regulatory requirements in all jurisdictions in which you operate.
With this background information, you can start to include social risks into your risk assessment, leveraging work done by the first and second lines, and begin to provide assurance over these key risks.

How internal audit can make an impact :
Clearly, we should be focusing on the biggest risks for the organization. However, we often need to consider the impact on stakeholder groups in aggregate, rather than just for each risk. Staff is a good example. We should certainly consider risks around compliance with labor laws but understanding the impacts on staff also requires the inclusion of wellbeing, health and safety, benefits, employee engagement, and EDI to assess the potential risk around staff as a group. Internal audit can add value by looking at risk in this way and provide more holistic assurance over risks relating to specific stakeholders.

Internal audit can also take a broader look at the organization’s approach to social risk. As I suggested earlier, it is often a distributed responsibility, but the risks do not exist in isolation. Some questions you can ask:

What is the organization’s attitude towards social risks? Are social factors (collectively or specific issues) considered in strategic planning or discussed at the Board level?
Have key stakeholders been identified? Do these make sense given what you know?
Is social impact considered in decision-making, particularly investment decisions and project evaluation? For government and social-purpose organizations, this will often be a core part of the decision-making process. But even in commercial organizations, evaluation of social risks and impacts will often be built in.
Are there targets and performance metrics in place? For key risks there often are metrics, but they may not be evaluated as a whole – which could be acceptable if they have sufficient prominence. As for other ESG risks, the availability and quality of the data may be a challenge as standards, systems, and processes are evolving. This provides an opportunity for internal audit to make an impact by evaluating systems and processes and by validating the data.
Some examples
Labor standards
The subject of labor standards is broad, but if we consider it in two parts, it may help. First there are fundamental rights at a global level which most countries are adhering to as members of the International Labour Organization. These cover issues such as forced labor, child labor, maternity, working hours, discrimination, health and safety, and unionization rights. Second, there are expectations beyond this, which often vary by country and include benefits, well-being, and employee engagement. There are many ways for internal audit to make an impact here. I will address two very different audit examples:

An organization’s own employment activities have always been part of an audit universe. There is an opportunity to take this further, providing insight and assurance into, for example, employee wellbeing and engagement. Most large organizations conduct surveys covering one or both, but how effectively do they select, track, and use metrics? Also, how effective are follow-up plans? These are sensitive areas, but this is largely about how data is collected and used, and how effectively plans are defined and implemented. All are very well aligned to core internal audit skill sets.
The broader issue of labor standards risk incorporates many parts of a business. As well as an organization’s own employees, we need to consider those in the supply chain, service companies, and any other partners. The focus of an audit is likely to be on procurement and contract management processes. Do contracts stipulate appropriate measures (which vary on the size and nature of the organization)? What independent verification is available that standards are complied with? What monitoring is in place within the organization to highlight emerging issues? All questions internal audit is well-positioned to consider and provide assurance over.

Sales practices :
Sales practices have been under the microscope at various points over the last century. Often it relates to providing dishonest or misleading information, or selling products or services are known not to be in the best interest of the buyer. The banking crisis of 2008 highlighted unethical practices which led to a significant shift to providing services based on the customer. Earlier examples are tobacco and baby formula, the health impacts of which were not accurately portrayed. In both cases, poor practices continued in parts of the developing world long after they were prohibited in the West.

Risks are primarily reputational, but often there are legal and regulatory considerations that can be substantial. Let’s look at two ways in which internal audit can make an impact in this area:

The first is not about the sales process itself, but about whether organizations are considering the customer in the products and services they sell. All jurisdictions have regulations about product quality or the types of services that can be sold to different groups of consumers. Examples range from food standards to complex financial products. In addition, there are overarching responsibilities to ensure customer health and safety (whether on-site or through the products or services they are using) that should be considered. This could be as obvious as ensuring products don’t cause a choking hazard or more complex such as the danger posed when providing social media platforms to young people. Internal auditors should understand the relevant regulations, and any voluntary codes, to provide assurance that there are appropriate controls over these risks, often as part of an existing audit. But you can also go further by considering the more complex aspects of risk and raising concerns if these have not been appropriately considered as customer needs and welfare are an integral part of product/service design and production.
Internal audit can provide assurance over the sales process itself. In any setting and for any customer group, there should be defined processes for marketing, customer communications, and best practices and guidelines a salesperson should consider when making the sale. For complex products such as insurance, this may be very structured, whereas a very light touch would be expected for simple products. Controls may include guidelines, review, and approval for marketing materials, standard templates for communications, and certifications and training for sales. When auditing, we need to be mindful of having realistic expectations for the type of products and services being sold but also be prepared to challenge when processes are insufficient or not well-evidenced. Additional considerations include data privacy, avoidance of discrimination, and the need to look at practices in all relevant jurisdictions.
To summarize, we have shown the variety of social risks within ESG and how internal audit can use their skill set to make an impact by providing assurance over some of these key risks. There are good sources of information freely available to understand different issues in more detail to help assess how social risks may impact your organization and your audit response.

The third and final article in this series will focus on the “G” (Governance) in ESG which covers a broad range of corporate activities. It is important to understand these risks as they provide the foundation for effective ESG program management.

This week Audit International are taking a look at the 4 ways how Internal Audit can get a seat at the table.

When it comes to risk management and compliance, most organizations operate on a 3 Lines of Defense (3LOD) model, in which operational management, compliance, and internal audit work together in tandem to assess and mitigate risk and manage controls and compliance.

This model may be successful in theory, but as the risk management and compliance functions have grown more complex, it doesn’t always work as well as you might hope. Given the rising sophistication of cybersecurity threats and incidents of fraud, and the increasing compliance requirements posed upon organizations of all sizes, it can be difficult to keep an organization-wide pulse on threats and breaches in compliance as they arise.

The problem is, the three branches don’t always collaborate effectively, which may leave internal audit out of the loop and unable to provide much value to the organization. They may not have access to the data they need to generate effective recommendations. The internal audit team’s focus may be simply on checking boxes and ensuring compliance, rather than providing strategic insights that will help your organization understand and take steps to mitigate new threats.

If you want your internal audit team to move the needle at your organization, you need to get the ear of executives who can advocate for your work. By partnering with leadership, you’ll be able to spearhead new initiatives and gain critical access to data that will help your organization save money and reduce risk, proving your team’s value.

Here are four strategies for doing that effectively:

Identify the key people who can support you, and make a plan to build relationships with them
Your audit team will naturally be in touch with the managers who can provide key information needed to conduct your audits—but by focusing only on these contacts, you’re missing out on building relationships with the leaders who will be able to help you gain a more visible role in the organization. Build a plan for conducting periodic outreach to higher-level executives within your organization, such as your chief risk officer or your CTO. You can solicit feedback from them on any open questions they may want your team to review in your audits, or provide high-level executive briefs showcasing work that you’ve done and issues they may want to explore in further detail. Make sure that they know you and your team are available to support them and open for feedback.

Proactively address organization-wide trends
Rather than focusing solely on issues identified in individual audits, start looking at your audit results in aggregate to identify trends. Is a single department or office location having trouble resolving a specific compliance issue, or is it an across-the-board trend that should be shared with your executive team? Review your data frequently to understand risks that should be mitigated, and come up with step-by-step action plans for how they should be addressed, including who’s responsible and what the benchmarks for success are.

Pay close attention to third-party risks
Many audit teams take an insular view of risk management, failing to uncover the external risks brought on by vendors and technology partners. Make sure that you have policies in place to carefully vet and automate compliance on your third-party vendors, pulling in external data that will alert you to any financial or legal issues they may face. Regularly track all of your solutions and technology partners for red flags, and ensure that you have a strategy for mitigating them. You can showcase your findings in sessions with executives and other partners throughout the business, and collaborate to come up with a plan for any of your scenarios. Keep in mind that risks from big providers such as Amazon or Facebook may impact a lot of your customers or partners as well, so ensure that you map out all of the variables that may impact your company’s business model across the board.

Use best-in-class GRC technology to automate compliance and analyze data
In order to provide the most useful insights to your leadership team, it’s important to integrate your entire risk management function across an easy-to-use GRC platform. Your GRC platform should come with pre-built content that will help you automate your controls framework, regardless of your industry. It should make it easy to monitor compliance status and risk levels across the organization at any given time, with triggers prompting action when control levels are not being met. You should be able to easily drill down into your data and generate executive dashboards, so that you can share insights to justify recommendations and help your leadership team make better informed business decisions.

By building a cohesive strategy for integrating with the 3LOD, backed by in-depth data analytics, real-time data feeds, and workflow automation, your audit team will be able to generate insights that can help to identify new risks, and develop new strategies for mitigating risks across the entire organization. This will help you to become a highly visible, influential, and trusted partner to the business.

“Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
Calling
– Switzerland 0041 4350 830 59 or
– US 001 917 508 5615
E-mail:
– info@audit-international.com”

If the last few years have shown us here at Audit International anything, it’s that we must be ready for the unexpected. From the disruptions of the global pandemic to soaring inflation, from political scandals to a war of aggression in Ukraine—life as we know it is changing.

The public sector doesn’t exist in a vacuum. Global events have a direct effect on national public services, and uncertainty causes disruption. The public sector must adapt to these changes if it is to continue delivering essential services for the taxpayer. Long-term funding challenges, climate change, and changing demographics also add to the pressures the global public sector is facing, and with technology changing the way we work, how does the role of internal audit fit into this complex web of demands and transformations?

As organizations react to these external changes, their assurance needs will inevitably change too. If internal audit is to stay relevant, it needs to keep pace with the changing demands of the organization.
To get a better understanding of how to improve the impact of internal audit and unlock its full potential, Chartered Institute of Public Finance and Accountancy (CIPFA) asked over 800 internal audit professionals and clients from across the United Kingdom for their experiences and views.

Their research revealed that 93 percent of the internal audit leaders who responded strongly agreed that internal audit supports the management of the organization, while 88 percent of managers who responded felt the same. Although there is some disparity between the two figures, they show that managers and heads of internal audit broadly agree that internal audit contributes to effective organizational management. Despite these promising statistics, when asked questions about the specific areas where internal audit is making an impact, there was significant disagreement.

Divergent Views
The CIPFA found that heads of internal audit and their clients, the management of organizations, often had substantially different views on what internal audit currently delivers to the organization. For example, 73 percent of heads of internal audit believe that they act as an independent critical friend on committees or steering groups, with just 43 percent of management agreeing with this. More worrisome, only 35 percent of audit committee members thought that internal audit provided this role. Ninety-one per cent of internal audit leaders said they provide advice on new systems and developments, but only 62 percent of managers agreed. This disparity is common across a range of different services and roles provided by internal audit, with clients consistently believing internal audit’s input is significantly less than what the heads of internal audit believe.

This shows that heads of internal audit need to be more vocal about the work their teams are actually doing for the organization. They need to become advocates for internal audit and promote the work of their teams, while clearly explaining to management how vital internal audit is and how it can help the organization reach its goals. Only then will the input of audit teams be fully understood and appreciated by clients, managers, and audit committees.
The more management understands the role of internal audit, the more expectations they will have of it. Higher expectations mean that internal audit becomes more intrinsically valuable and more relevant to an organization, ensuring its important role in the future.

Three Areas of Focus
-More strategic coverage can also help internal audit transform and adapt for an uncertain future. We asked respondents to identify three key areas that internal audit should focus on in the future to have the greatest impact on an organization.
-Cybersecurity was the top priority, with just under 60 percent of respondents wanting internal audit to focus on this key strategic area in the next three years. Just over 50 percent identified digitization and data use within organizations as the next most important area, while 47 percent thought that climate change and sustainability would be important areas of focus for internal audit professionals in the next three years.
-The area of internal financial risk, which internal audit has traditionally provided assurance in, such as payroll and income, are generally already well managed with little exposure to risk. So, does internal audit still have a role to play in mitigating financial risk? About one-third (35 percent) of respondents said they thought financial viability was a key area for the future. This includes more strategic areas such as financial resilience and medium- and long-term financial strategies—both of which carry considerable risk to the organization. Without seeking to influence the financial policies themselves, internal audit can provide vital independent assurance to decision makers to allow them to take on more risk and be more ambitious.

If internal audit takes a more strategic role in emerging issues and provides assurance not just around internal financial risk, then it can position itself as a trusted partner to the organization. In the coming years, it will be vital for audit professionals to keep up with the changing demands of clients, and the world around us, if internal audit is to stay relevant.

– The Skills Gap
Continual life-long learning is also essential if internal audit is to stay on the front foot. It is this up-skilling that will help auditors keep pace with emerging organizational demands, like cloud computing and cyber security. Out of the heads of internal auditors who responded to our survey, 55 percent agreed that they had sufficient skills and experience to meet the needs of the organization. This is broadly similar to the number of senior managers who agreed that their internal audit teams had the skills needed. There is still room for improvement in this area.
In its 2020 report on the future of jobs, the World Economic Forum identified some key technologies that companies thought would most likely be adopted by 2025. Cloud computing, big data analysis, artificial intelligence, and cybersecurity all came out on top. These represent growth areas for internal audit and where internal audit professionals will have to upskill to provide maximum value to the organization.

Internal auditors cannot be subject matter experts in all these areas, of course, and some aspects will have to be outsourced to specialized firms. Internal auditors can, however, oversee the organization’s direction and approach to these key strategic areas, provide independent assurance and act as a critical friend where necessary. Having good communication, critical and analytical reasoning skills, financial literacy, as well as risk-based auditing skills will help internal auditors tackle these complex subject areas.
Internal audit can have a bright future. Although the world is in a particularly uncertain phase, and organizations’ assurance requirements are rapidly changing to reflect this, internal audit can still make a significant impact and provide a valuable service. But to do this, it must also adapt.
Embracing New Challenges

To stay still is to move backwards when the pace of change is so considerable. Internal audit’s future lies in embracing new challenges such as cybersecurity, financial viability, climate change, artificial intelligence and big data. It can provide organizations with the assurance they so badly need around these issues – allowing them to embrace new technologies and ambitious strategies. To do this, internal auditors need access to learning and development to equip them with appropriate skills to find solutions to these complex issues.

All of this, however, will not lead to the wanted outcomes if heads of internal audit do not advocate and promote the work of their teams within organizations. They must make sure management and clients understand their assurance needs and how internal audit teams support organizations to reach their goals.
Good public financial management is at the core of delivering value for money and improving public services. A much broader, more diverse, and louder internal audit function can reinforce and support good financial management, both now and well into the future.

“Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
Calling
– Switzerland 0041 4350 830 59 or
– US 001 917 508 5615
E-mail:
– info@audit-international.com”