4 Strategies for Internal Audit to get a seat at the table

 

 

Where does Internal Audit fit within an increasingly technology-driven, innovation-oriented, unpredictable, and disruptive future? Despite continual efforts to address stakeholders’ growing list of needs, the most common response is to play catch-up. Let’s delve into what’s required to make internal audit proactive and futuristic in its approach?

What is Internal Audit?

Internal auditing is an independent function intended to evaluate and provide objective assurance on a company’s risk management, internal control, and governance processes. Internal auditing can play various roles in an organization’s governance effort, according to a recent IIA global policy statement on organizational governance.

Internal audit has long been encouraged to adopt new tools and approaches as well as acquire the capabilities required to effectively respond to today’s problems. An organization intending to make Internal audit efficient must have a unified vision for both the professional and the role. Such a vision is necessary for driving critical changes and prioritizing projects for the internal audit function and the company as a whole.

Most firms use a 3 Lines of Defense (3LOD) model for risk management and compliance. Internal audit, compliance, and operational management work together to analyze and reduce risk and manage compliance and controls.

This strategy looks good on paper, but it doesn’t always work and fails to achieve desired results since risk management, and compliance functions have become increasingly sophisticated. Given the increasing sophistication of cybersecurity threats and fraud occurrences added with innovative methods used by fraudsters globally, watchdogs have been imposing newer and more complex compliance requirements on enterprises of all sizes.

The difficulty is that the three branches don’t often coordinate well together due to conflicting interests, leaving internal audits out of the loop and unable to add much value to the company. Have you ever looked into whether your organization’s internal audit team has access to the information they need to make good suggestions? Generally, the Internal audit teams are more concerned with checking boxes in the checklist and ensuring compliance than with delivering strategic insights that will assist your company in recognizing and responding to newer threats on an ongoing basis.

If you want your internal audit team to make a difference at your company, you’ll need to empower the leaders who can champion your efforts. You’ll be able to pioneer new initiatives and acquire vital access to data that will help your firm not just save money but primarily decrease risk by working with leadership and demonstrating your team’s worth.

How To Do That?

Here are the four strategies that can help internal audits to make a difference:

Identify Key People And Make A Plan To Build Relation

Create a strategy for reaching out to higher-level executives in your company, such as your chief risk officer or COO or CTO, on a regular basis. You can get their opinion on any open topics they’d like your team to look into during your audits, or you can provide them with high-level executive briefs highlighting work you’ve done and concerns they’d like to look into further. Assure them that you and your team are accessible to assist them and that you welcome feedback.

Address Company-Wide Trends Proactively

Start looking at your audit results in aggregate to uncover trends emerging over a period of time rather than focusing primarily on faults identified in individual audits. Is a specific compliance issue affecting a single department or office location, or is it an overarching pattern that should be addressed with your senior team? Review your data on a regular basis to identify risks that should be minimized and develop step-by-step action plans for addressing them, including who is responsible and what the success criteria are.

Pay Attention To The Risks Posed By Third Parties

Make sure you have rules in place to thoroughly assess and automate compliance with your third-party vendors, including the use of external data to alert you to any financial or legal concerns they may be facing. Check all of your solutions and collaborate with your technology partners to look for red flags on a regular basis and make sure that you have a strategy in place to deal with them. In addition, you can present your findings in meetings with CEOs and other business partners and work together to develop a plan for any of your situations.

Automate Compliance And Data Analysis with GRC technology

Regardless of your business, your GRC platform should include pre-built content to help you in automating your controls architecture. It should be simple and clear to keep track of compliance and risk levels throughout the organization at all times, with triggers prompting action if control levels aren’t met. You should be able to quickly drill down into your data and create executive dashboards so that you can share insights to support suggestions and assist your leadership team in making better business decisions.

Wrapping Up

By developing a cohesive strategy for integrating with the 3LOD, backed by in-depth data analytics, real-time data feeds, and workflow automation, your internal audit team, will be able to gain insights that can help identify new risks and develop new strategies for mitigating risks across the entire organization. This will help you become not just a well-known and prominent internal auditor but a dependable business partner.