Some may go all in with a full transformation, while others may adopt a more iterative approach depending on industry regulations, the complexity and needs of the business and how quickly the larger enterprise is changing.
In all cases, transformation takes time and should be guided by a formal transformation plan and road map that provides direction, purpose and key tangible building blocks.
The bottom line: For the internal audit function, avoiding change is not an option. Transforming itself is not only what the business needs, it’s crucial to the function’s contribution to the enterprise, not to mention its continuing relevance to the business.
There are 5.9 million businesses in corporate America employing 127 million people. Estimates predict 40% of jobs could be affected by automation in the next 10 years. The balance of jobs will significantly change in nature, requiring new skill sets.
Imagine a world in which internal audit and other risk management functions stop using traditional approaches to audit or monitor a business area. Taking a sample-sized approach is a thing of the past. Instead, internal auditors leverage data and digital capabilities to smartly audit process areas, uncovering trends and patterns that previously would have been impossible to find. Imagine that Internal Audit can effectively answer business’s question, “Can you tell me something I don’t know?”
Identify blind spots, previously humanly impossible
Collaborate with other lines of defense to create a consolidated view of risks and use a common risk language
Provide greater coverage without increasing audit resources
Conduct audits with surgical precision
Uncover human behavioral patterns through machine learning and regression
Influence the strengthening of first- and second-line defenses through digital collaboration and continuous monitoring
Every stage of the internal audit lifecycle is impacted. The internal audit is evolving both operationally and strategically, by:
The internal audit’s stakeholder group has expanded and expectations are heightened. Change is fast and risks are complex and interconnected. As it transforms, Internal Audit can collaborate with first and second line functions in data-driven ways not previously possible—and, in doing so, reduce the likelihood of blind spots or significant issues materializing.
The three lines of defense can identify common sources of data and synergize data retrieval and analysis, so that each group is working efficiently and developing insights from a common foundation. And internal audit teams can share and other tools that can become real-time monitoring capabilities for the first and second line of defense. There are many opportunities. With an eye toward the broader risk capabilities of the organization, the internal audit can be a catalyst for bringing a greater level of insight and more effective assurance to the management team.
Internal audit teams have an opportunity to re-envision the impact they can make for the organization and reframe the approach they take to add value and keep pace with business change. Some areas to consider before starting your journey:
Digital upskilling is at the heart of Internal Audit’s transformation. It’s a new world that requires internal audit acumen, digital and data acumen as well as business acumen. Internal audit teams need people who can use technology effectively and who have the knowledge to audit business operations that use new technologies. Not all auditors need to be data scientists, but they do need to understand data sources to assess data quality and to know what insights can be drawn from data. Teams also need a high degree of business acumen to facilitate better conversations with business leaders and help identify where risks lie.
Digital upskilling is a journey in which no one has to be left behind. But it might require a different approach than traditional training. Start the shift to tech adoption, mass automation and a culture of innovation through a new way of learning:
Today’s workforce wants to stay relevant. Answer that need.