The Evolution of Internal Audit into a More Strategic Figure

Today,?internal audit services ?exist in the majority of large and many medium-sized businesses. Many managers of businesses that do not yet have such divisions are considering either developing one or using?internal audit?outsourcing in India.

There are several reasons why internal audit consulting services are popular.

1. It is an urgent need for owners and management to streamline business processes in the company, which in many cases can lead to very tangible cost savings.
2. The need for the board of directors (supervisory board) for an independent and objective source of information about the state of affairs in the company.
3. The need to reduce the costs of numerous control units in the company by creating a service with a wide range of responsibilities.

In recent years, internal audit has come a long way in its development and has made significant progress in the issue of recognition from the top management of companies.

However, internal audit is once again on the verge of change. These changes have been brewing for a long time, and the crises of the past have only accelerated the process.

Could internal audit consultants do more to help their companies stay out of the mess? It seems that they could.

To do this, it is necessary, firstly, to focus on the most significant risks in terms of their impact on the organization (high-level risks), including strategic ones.

Secondly, it is necessary to be able to bring to the understanding of the stakeholders (the board of directors and senior executives) what they were not always ready to hear and perceive and this is precisely the role of internal audit.

And here, another very important question arises, the answer to which can determine the subsequent development of internal audit – the question of the level of involvement of internal audit in the affairs of the company, or, in other words, the level of impact on the company’s activities.

Will the scope of internal audit be limited to traditional areas – operational, financial, and compliance risks – or will internal audit enter the level of strategic risks? (As it is strategic risks that pose the greatest threats to the company, leading to significant losses and bankruptcies.)

On the other hand, are the boards of directors and senior executives of companies ready to see an internal audit in this role? Indeed, they are!

Long confined to control and regulation, internal auditors (as well as external auditors) now face a real issue of added value.

Changes in companies but also the crisis have changed the expectations, in particular, of managers. According to them, internal auditors must now “make a useful and relevant contribution to the company while fulfilling their mission”

Thus, as per some reports, 45% of stakeholders (managers and directors) expect internal audit to go beyond its traditional assurance mission (providing objective assurance on the effectiveness of the organization’s internal controls) and to play the role of “strategic advisor” (or “Trusted advisor”, likely to create added value through proactive strategic advice and going well beyond the effective and efficient execution of the audit plan).

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise.?AKGVG & Associates ?does not intend to advertise its services through this.

Posted by

Aman Aggarwal

AKGVG & Associates