Amid a rapidly changing business landscape, most internal auditors see themselves moving beyond their traditional assurance provider role and becoming proactive advisers to corporations, according to PricewaterhouseCoopers.
PwC’s latest State of the Internal Audit Profession survey found that while only 11% of chief audit executives see their current internal audit function as providing value-added services and proactive advice, 60% of CAEs and just over 45% of stakeholders expect the function to have a more proactive role within the next five years.
The report also identifies four key areas that will enable internal audit to contribute to organizations’ strategic and transformational initiatives, including risk focus, talent model, business alignment, and technology.
“As companies undergo significant change to their operations and models, internal audit functions should be at the forefront of where the company is going, not where it’s been,” Jason Pett, internal audit services leader for PwC, said in a news release.
“Senior management and boards are looking for internal audit functions to be actively involved in business imperatives and offer proactive perspectives on all business risks.”
PwC said the internal audit functions considered by study participants to be contributing significant value are involved in transformational initiatives up to twice as frequently as their peers.
“Internal audit is not second-guessing strategic direction,” JoAnne Stephenson, chair of audit and risk committees for Challenger Limited, said. “[It] should be looking at the project management of strategic initiatives, the key risks, and the business processes.”
According to the report, internal auditors can be most effective in a proactive role if they focus on the right risks at the optimal time; develop the talent and business acumen to be relevant and offer valuable insight; strengthen their alignment with enterprise risk management and other lines of defense; and harness the power of data to provide better insights.
While 82% of CAEs say they leverage data analytics in some specific audits, just 48% use it for scoping decisions and only 43% leverage data to inform their risk assessment, PwC found.