5 Warning Signs that Your Internal Audit Function is not Ready for the New Standards

The clock is ticking for organisations worldwide as the new Global Internal Audit Standards inch closer to their effective date on 9 January 2025. Released on 9 January 2024, these standards represent a significant evolution in internal audit practice, aimed at enhancing quality, consistency, and effectiveness.

Early adoption was encouraged, but with the deadline looming, the question remains: is your internal audit function ready?

Failing to meet these updated standards can expose your organisation to reputational risks, governance challenges, and operational inefficiencies.

Here are five key signs that your internal audit function may not be prepared for implementation of the new Global Internal Audit Standards:

1. No Readiness Self-Assessment Conducted by the Chief Audit Executive (CAE)

IIA Global has provided a readiness assessment tool to compare current practices with the 2024 standards. This tool also highlights gaps in compliance that need urgent attention.

The CAE is required to utilise this readiness tool in conjunction with previous quality assessments to evaluate the current state of the internal audit function.

2. Lack of Dialogue About Domain III with the Board and Senior Management

Domain III focuses on governing the internal audit function, highlighting the essential conditions for its effectiveness. Misalignment between the CAE, board, and senior management could weaken internal audit’s positioning.

The CAE is required to Initiate discussions on the purpose of internal auditing (Domain I), Essential conditions outlined in Domain III and Potential impacts of inadequate support from leadership.

The discussions are needed to inform the board and senior management about the importance of the essential conditions and to gain alignment among their respective responsibilities.

3. Audit Team Hasn’t Signed the Ethics and Professionalism Acknowledgement Form

Ethics and professionalism are the foundation of effective internal auditing. The lack of signed acknowledgements signals a gap in the team’s alignment with the standards.

The CAE should require all internal auditors to sign the Global Internal Audit Standards Ethics and Professionalism Acknowledgement form, ensuring they commit to the principles in Domain II.

IIA Global has provided a tool to support internal auditors in evidencing conformance with Domain II: Ethics and Professionalism of the Global Internal Audit Standards. The document provides the principles and requirements from Domain II and an acknowledgement page that internal auditors can sign to demonstrate that they have read and understood Domain II and agree to conform with its requirements

4. No Evidence of the CAE’s Familiarity with the New Standards

Domain IV mandates the CAE to manage the internal audit function per the new standards, from strategic planning to stakeholder communication. A lack of understanding jeopardises compliance and performance.

The Audit Committee must obtain evidence of the CAE’s familiarity with the new standards, such as training certificates or strategy updates.

5. Lack of Training and Assessment of the Internal Audit Team

Competency standards require all internal auditors to develop knowledge of the new standards, ensuring they can deliver quality services.

The CAE must evaluate team competencies, develop tailored training plans and Assess knowledge retention through testing.

The Standards require that each internal auditor be responsible for continually developing and applying the competencies necessary to fulfill their professional responsibilities. Additionally, the chief audit executive must ensure that the internal audit function collectively possesses the competencies to perform the internal audit services described in the internal audit charter or must obtain the necessary competencies.

In Conclusion

The new Global Internal Audit Standards are more than a compliance checklist; they represent a strategic opportunity to strengthen the internal audit function.

Organisations that proactively address readiness gaps will not only achieve compliance but also enhance their governance, risk management, and control processes.

Is your Internal Audit Function ready? The time to act is now to ensure your internal audit function is aligned with the future of the profession.

Source: Content adapted from the Global Internal Audit Standards (2024)