Internal Audit

Maximizing the use of data analytics can be indispensable for an organization, allowing internal audit to be faster, more flexible and more strategic in its risk assessment practices. Effective use of data analytics incorporates emerging internal and external risks around which an organization may need to adjust its audit plans. Data analytics further supports internal audit to focus and refocus work as risk effects shift, so that an organization’s limited time and resources can be directed toward the biggest, most strategic risks. 

Data governance is essential to ensure the accuracy, security and proper use of data within an organization — which becomes even more critical with the integration of artificial intelligence (AI). In addition to establishing clear policies and procedures, organizations need robust data management practices, regular audits and continuous monitoring to ensure data quality and compliance. Effective data governance enables organizations to maintain data integrity, enhance decision-making and foster trust — ultimately driving better business outcomes and innovation. 

As organizations continue to grow, balancing efficiency, sustainability and scalability with controls has proven to be an important emerging risk. Excessive controls and policies can hinder growth, presenting internal auditors in expanding organizations with the challenge of balancing continuous risk monitoring with the pursuit of new processes, opportunities, and technologies to support and drive growth. 

An organization’s internal audit function is key to ensuring that strategic risks are appropriately managed and mitigated. The combination of external forces (e.g., a complex regulatory environment, rapidly evolving technology and increasing cyber threats) and internal forces (e.g., increasing demands from organization leaders and skill gaps) should compel leaders to investigate working with a co-sourced or outsourced internal audit partner. 

Effective third-party risk management (TPRM) requires close collaboration between risk management and business functions to identify, assess and mitigate risks associated with external vendors and partners. Well-executed TPRM helps business leaders understand how third parties can increase profitability while ensuring resilience against new and unexpected challenges and drive compliance.

On Jan. 9, 2024, the Institute of Internal Auditors (IIA) released updated Global Internal Audit Standards that will go into effect in January 2025. The Standards will bring about significant changes — including increased focus on how internal audit serves the public interest, clarifications to the role of the board and new requirements for quality assurance and improvement programs. 

With five domains, 15 principles and 52 standards in total, it’s no longer a question of if these changes will impact organizations — but rather how and when.  

The cross-functional nature and shared responsibility of managing environmental, social and governance (ESG) within an organization can be complex. Fortunately, internal audit is uniquely positioned to partner with various teams to support development of an ESG strategy based on data requests from key stakeholders. Internal audit’s experience with assessing risk, identifying processes, understanding reporting requirements, and a keen awareness of an organization’s goals and strategies will be beneficial to an organization as they embark on their ESG journey.