The Internal Audit Function is strategically positioned within the governance structure to contribute to stakeholder trust and deliver value. The notion of value creation by Internal Auditors has been around for a while but there is an increasing need to continue enhancing and evolving the role of the Internal Auditor. The perception of Internal Auditors has been slowly shifting from problem-finders to also problem-solvers and the role continues to grow and develop over time. An effective internal audit function is one which aligns its activities to the organisation’s vision in providing timely and relevant observations and recommendations. This is different from the concept of looking at specific snippets of the business at a point in time and reporting thereon. An Internal Auditor needs to be engaged at the right level within an organisation and involved in the strategic discussions to bring the right insights and provide consultative support or real-time assurance. In doing so, the Internal Auditor needs to collaborate with other components of the three lines model within an organisation to assess how they align to the broader risk universe. This would allow the Internal Auditor to consult on active risk mitigation needs rather than waiting until the risk is managed to provide assurance support.
This present and dynamic role of the Internal Auditor becomes increasingly relevant as we continue to witness growth strategies across organisations with a focus on strategic alliances, mergers and acquisitions and an increasing investment in digital technologies. In such an environment, the Internal Auditor inevitably plays a pivotal role in supporting organisations to earn trust with the relevant stakeholders. For such a role to be executed effectively, the Internal Auditor needs to be close to the business and its strategic objectives to engage in important risk and opportunity conversations across the Company.
As with any other business partner, the ability to create trusted and respectful relationships is key. Firstly, the Internal Auditor needs to work closely with the Audit Committee/Board Chair in fulfilling its responsibilities. An Internal Auditor should also ensure that regular in-camera meetings are held with the rest of the Audit Committee/Board members to ensure that governance matters, if any, are addressed. Furthermore, the right level of relationships at Board and C-suite level enables the Internal Auditor to contribute value-add insights as business decisions unfold. This will in turn stimulate the right level of discussion around processes and controls that support the strategic journeys.
Coupled with interpersonal skills, a successful Internal Auditor is one who manages to bring the risk and control aspects to the fore while applying them to the relevant business scenario in a clear, concise and pragmatic manner. The Internal Auditor needs to engage in meaningful discussions with management to convey the right message from a third line perspective, while maintaining a business context and related strategic objectives. Such discussions typically further strengthen relationships and the Internal Auditor’s position within an organisation.
It is also the Internal Auditor’s role (and responsibility) to highlight the emerging risks that companies face and challenge how such risks are being considered for successful transformation journeys. The Internal Audit Plan should reflect the initiatives arising from the organisation’s overall business strategy. Although an established and approved Internal Audit Plan needs to be in place, it should also be responsive to disruption and flexed to reflect the realities of the business on a risk-based approach. Considering all the current and emerging risks cutting across an organisation, an effective internal audit function is one which has access to the different specialists, such as digital, cyber security, ESG, AML and Culture. While it is difficult for an Internal Auditor to cover all aspects within an organisation, it highlights the importance of ensuring that an internal audit function has access to the right skills and resources to execute its role across the relevant business areas.
During a time when stakeholder trust is a critical factor to business success, the Internal Auditor is presented with an interesting and exciting opportunity to contribute to business confidence. On the other hand, companies can leverage on the evolving role of the Internal Auditor in further strengthening their position in the market, including Regulators, whilst benefiting from the value this brings to their organisations.