Challenges of Internal Audit
The internal Audit profession is still evolving and this has brought about great opportunities and great Challenges. There are several big challenges facing internal audit departments and still more facing the internal audit profession as a whole. And some of these challenges represent opportunities as well as obstacles to overcome.
The internal Audit professionals continue to juggle concerns about compliance, strategic business risk, resources, and technology. Chief Audit executives have outlined a few hurdles to overcome in internal audit departments at recent Internal Audit conferences and what they have to do to rise to the occasion. Here are some of the IA Challenges.
There is difficulty in finding the ‘right talent’. They are critical skills and attributes needed in the internal audit department; some them include integrity, courage, conflict management skills business knowledge, ability to communicate well and many others. CAE’s have reported that is difficult to find all these qualities in one person and this in turn has led to a shortage in staff and human resource needed for their departments. A shortage in staffing has led to an increase in pay for a lot of internal auditors. Hiring and keeping the "right kind of talent," is internal audit's greatest challenge.
Matching the skills of internal audit personnel with an organization's needs and demands. Most companies reported having too many internal auditors with financial reporting compliance skills. And some internal auditors are mainly focused on IT functionalities. This leaves gaps in other significant areas like Fraud prevention and detection, Tax, Controls and transactions. There is a need for greater focus on matching the skills of internal audit personnel with an organization’s needs and demands.
Delivering Additional Value. An ongoing challenge for internal audit relates to multiple stakeholder expectations which, at times, May differ. Internal auditors are now expected to do a lot more by stakeholders. And At the top of the list is providing more insight on risk and helping the company to be able to adapt to handle the forever changing nature of risk. Some of these risks an internal auditor is now expected to add insight to include; cybersecurity, emerging markets, regulatory compliance, third-party relationships and IT governance. Requiring the Internal Auditor to perform duties outside its functionality also makes it difficult for internal audit to provide independent assurance to the board if IA ends up taking on risk management duties that are intended for management.
Use of technology in Internal audit. There is the need to do a better job at leveraging technology in internal audit including using data analytics. Internal audit departments need to leverage their knowledge and technology to improve their coverage. They should also develop metrics that show the value of the expanded services. Many internal audit departments admit they are struggling to find good IT auditors.
Gaining trust. Robert King, the chief audit executive at FedEx, outlined another difficult challenge of internal audit at the SuperStrategies 2016 conference. And that is, Building trust, especially since it can take a long time to build, but can be damaged in the blink of an eye. As an internal auditor trust has to be earned and cannot be solely given on reputation. To gain stakeholder trust in your ability to execute and provide value for the organisation can take quite a long time. According to King, a few of steps along the way to earning trust include being transparent, fair, candid, and personable.
Adjusting to these challenges and turning them into opportunities to improve business performance will require a modern day internal auditor to think differently and react quickly to them.
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