The day comes, if it hasn’t already, when the audit committee challenges the relevance and value of the internal audit (IA) function to the organization and its stakeholders. Typically, several factors converge that prompt concern – external challenges, absence of significant findings and recommendations, repeated control failures, fraud, etc. Many IA functions are quick to point to their recently completed Quality Assurance and Improvement Program and/or External Assessment results, asserting that compliance with the International Standards for the Professional Practice of Internal Auditing (Standards) is a key indicator of the function’s value to the organization. In the eyes of the audit committee, would the results of quality assurance programs provide enough persuasive evidence to measure internal audit’s relevance and value? An informed and proactive audit committee will demand additional evidence. Critical to the argument will be matters such as:
• Maturity of the risk management framework
• Monitoring tools to track and manage risks and adjust the audit plan when warranted
• Use of specialists in areas requiring unique skills (IT, tax, etc.)
• Expanding industry and technical training
• Capture and use of information through technology
• Staying in front of information technology risks
• Incorporation of fraud prevention and detection practices
• Demonstrate governance, risk management and compliance integration
• Specific and measurable accomplishments
Internal audit must demonstrate that its methodologies and practices are leading-edge, and effectively monitor and mitigate ever-evolving risks that present challenges to the organization. It is recommended that internal audit leadership, in addition to establishing quality assurance program, build a professional network with other organizations to compare and contrast methodologies and practices (i.e., benchmarking the function). If IA leadership is not frequently collaborating with others in the profession, practices can become stale and outdated, and the function expendable, as opposed to remaining relevant and adding value to the organization.
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