INTERNAL AUDIT STRATEGY An understanding of Standard 9.2 of the Global Internal Audit Standards

To develop an internal audit function that truly aligns with an organization’s strategic direction, the Chief Audit Executive (CAE) must consider the broader objectives and expectations laid out by the board and senior management. Domain IV Standard 9.2 provides an invaluable framework for this approach, emphasizing that the CAE should start by fully understanding the organization’s overarching strategy, objectives, and stakeholder needs. The internal audit function, when aligned with these strategic pillars, becomes a vital partner in helping the organization achieve its future vision.

In crafting the internal audit vision, the CAE defines a desired future state, typically envisioned over a three- to five-year horizon. This vision acts as a compass, steering the internal audit function toward a state of enhanced strategic value, where its role surpasses mere compliance checks and becomes integral to governance, risk management, and control. The vision not only inspires internal auditors but also fosters a culture of continuous improvement, encouraging the function to adapt as organizational goals and challenges evolve.

To bridge the gap between the current state and this envisioned future, the CAE must identify strategic objectives that define achievable targets. A SWOT (Strengths, Weaknesses, Opportunities, Threats) or gap analysis can provide a clear view of where the internal audit function currently stands and highlight areas ripe for improvement. These analyses serve as a foundation for crafting targeted initiatives, from addressing skill gaps to leveraging technology for enhanced efficiency and effectiveness. The CAE can then prioritize these initiatives based on their strategic impact, with clear timelines for execution, fostering a phased approach that ensures adaptability and resilience.

Domain IV Standard 9.2 also emphasizes the importance of supporting initiatives, such as the use of technology to streamline audit processes and identify insights that can drive actionable improvements across the organization. By introducing data analytics and automation, the internal audit function can more quickly and accurately assess risks and provide meaningful insights. Equally essential is the development of internal auditors’ skills, particularly in emerging areas like data analysis and strategic risk assessment, to better support the organization’s evolving needs.

Risk-based audit methodologies further enable internal audit to focus on areas most critical to organizational objectives. Aligning risk assessments with strategic goals allows the audit function to pinpoint high-value activities, supporting decision-making at the executive level. The continuous use of data analytics brings depth to these assessments, ensuring that audits not only meet regulatory standards but also contribute to efficiency gains, resource optimization, and overall performance improvement.

Reporting plays a central role in reinforcing internal audit’s value. By tailoring audit reports to highlight relevant insights for each stakeholder group, from the board to operational management, the function can provide targeted, actionable recommendations. This tailored approach, complemented by data visualization, allows internal audit insights to be quickly understood and acted upon, thereby supporting the strategic objectives. Regular monitoring and follow-up on these recommendations ensure that the audit function remains accountable and its impact measurable.

Standard 9.2 encourages an adaptive internal audit strategy, adjusting as necessary to meet changes in organizational goals, governance maturity, or regulatory shifts. Key events like changes in board composition, executive turnover, or new regulations can signal the need for a realignment. Additionally, both internal and external assessments of the internal audit function provide invaluable feedback, helping to refine the function’s effectiveness and responsiveness to organizational shifts.

An internal audit function that operates as per the principles of Domain IV Standard 9.2 is one that continuously seeks improvement and aligns with the organization's strategic direction. Through a culture of feedback, collaboration, and regular strategy reviews, internal audit becomes an essential pillar supporting the organization’s resilience, agility, and overall performance. This integration of strategic vision, objective alignment, and stakeholder engagement transforms internal audit into a dynamic force that underpins long-term organizational success.

sponsored by www.tfl-consulting.com