PwC identifies the blueprint for an aligned, enhancing internal audit functions.
Aylesbury, UK -- (SBWIRE) -- 04/11/2014 -- Technology has paved business automation; monitor certain internal controls, improve organization’s productivity and risk management process yet it also posts new risk, rigorous regulations, demanding internal audits for more business insights across companies big or small. According to PricewaterhouseCoppers LLP or PwC suggests a gap between stakeholder’s expectation and internal audits performance based on recent survey.
The 10th annual State of Internal Audit Profession Study identifies an alignment of stakeholder expectations, matching skills and capabilities to these expectations to helps internal audit enhance the value delivered to the organization.
2014 survey results indicate that numerous stakeholders do not believe internal audit is meeting expectations. Fewer than half (45%) of senior management believe internal audit supplements significant value. Nearly 70% of board members expressed that internal audit adds significant value, a 10 points drop from 2013 data. This trend could either be due to internal audit failing to keep pace with the changing, complex risk environment, or it could reflects a situation in which internal audit lacks the resources to meet rising board member expectations.
Stake holders were not well aligned in their expectations of internal auditing in the areas of stakeholder management and delivering quality through a client service culture. This can be addressed through laying the groundwork for value and expanding the expectation set. Broader expectation sets are seen as adding significant value on the management’s perspective. While this bring broader range of skills and capabilities to the organization, having an expectation set does not correlate with internal audit’s opportunity to drive greater value to the organization by expanding capabilities and skills sets. Internal audit can deliver greater value for the enterprise if the stakeholders expand their expectations and internal audit expands its capabilities in response.
Internal audit and stakeholders should be establishing expectations aligned with the eight foundational attributes while proactively considering current and future needs as well as the increasing expectations of regulators and the second lines of defense, the business units and the risk/compliance functions.
Eight foundational attributes include;
Quality and Innovation. Quality standards have been identified and impost to cover all internal audit’s activities such as identifying improvement and opportunities. Innovation on the other hand is consistently fostered and rewarded.
Business Alignment. Under this attribute, expectations are articulated and communicated as well as the mission and value of internal audit.
Risk Focus. This approach identifies business risks. It assesses the enterprise key risk towards external business environmental changes.
Talent Model. A continual learning and developmental model is established to improve internal audit’s knowledge of business and its risks, conflict management and critical thinking.
Stakeholder Management. This approach captures internal audit’s expectations, communication strategy and timelines through one on one interviews and surveys.
Cost Effectiveness. Productivity is actively measured and managed to ensure the most cost-effective delivery of services.
Technology. Automation is applied to provide business efficiency and to utilize business issues, observations and recommendations. Techniques are also applied to provide warning of risk indicators and increase audit coverage.
Service Culture. These are metrics measuring customer satisfaction based on stakeholder expectation.
Once all of these values are defined, internal audit needs to make other functions materialize keeping an open communication with the stakeholders. Regular communication of expectations and responsibilities allows setting the foundation. Monthly and quarterly meetings are suggested to stay abreast on the company’s undertakings and the industry’s events, to keep a real time observations and recommendations regarding key initiatives, decisions and processes.
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