An effective internal audit function is a pillar of good corporate governance, playing a key role in an integrated governance, risk, and compliance (GRC) strategy.
Through independently assessing the effectiveness of GRC processes, internal auditors support their organizations in fostering accountability and achieving objectives.
In its position paper on internal auditing’s role in corporate governance, the Institute of Internal Auditors (IIA) highlights three ways audit functions bring value to their organization:
However, many organizations’ audit practices are designed merely to meet regulatory requirements rather than provide a proactive perspective on emerging risks and other trends.
Institutions that seek to mature their internal audit function and capture valuable risk intelligence must prioritize integration. To succeed in their roles, auditors need access to accurate data from other GRC areas, including risk and control management, compliance, and policy management.
Internal audit, along with operational management and risk/compliance functions — the “three lines” of defense — must work together to create and protect value, the IIA asserts in its Three Lines Model.
“All roles working together collectively contribute to the creation and protection of value when they are aligned with each other and with the prioritized interests of stakeholders. Alignment of activities is achieved through communication, cooperation, and collaboration. This ensures the reliability, coherence, and transparency of information needed for risk-based decision making.”
A holistic view of GRC activities and data enables internal audit — and other governance stakeholders including executive leadership and board/committee members — to communicate and collaborate effectively and share a common framework for discussing risks and controls.
But this type of cross-functional integration is difficult to implement without a technology architecture that enables data-sharing and standardized processes for risk identification and assessment.
In fact, the IIA estimates that more than 50% of internal audit functions are not taking advantage of the benefits that evolving technologies offer in support of management activities.
However, CAEs and other internal audit professionals recognize technology’s potential as a maturity enabler, despite being an underutilized solution. The majority of audit leaders (56%) say that investing in technology would be the most helpful way to increase or maintain their organization’s internal audit maturity, according to the IIA’s most recent “Pulse of Internal Audit” survey.
Learn how an audit management system can help modernize and mature your program in the Internal Audit Software Buyer’s Guide, where you’ll find tips for building a successful audit framework and evaluating technology solutions.