Now, more than at any time in history, internal auditors are viewed by audit committees and management less as police and more as trusted advisers, strategic partners and consultants. Partly due to the fallout from the 2008 financial crisis, the position is valued more than ever before. Management now looks to leverage internal audit as a strategic resource, recognizing that internal auditors’ broad and deep perspective of operations, risks and potential opportunities can help inform business decision-making.
In its latest edition of the annual Internal Auditing Around the World, Protiviti takes a look at the state of global internal audit practice. We find that many internal audit departments, along with their organizations, are in the midst of significant change and transformation – a period of reinvention. Internal audit teams are rising to the call to become strategic partners to the business – a role many have been working to achieve for years – while remaining careful not to compromise their independence and objectivity.
Here are some of the highlights from this year’s edition, according to top practitioners:
On continuous improvement:
Auditing is about driving improvement and enhancement for the good of all shareholders,” said David Barry, director of internal audit for the Australian wealth management company AMP Limited. “Our aim is to make risk management less nebulous and easier to manage.”
On strategic advice and consulting:
I think acting as a consultant to the business is the new frontier for the internal auditor,” said Marco Petracchini, senior vice president and director of internal audit for Eni, a multinational integrated energy company. “(We) have very broad knowledge of processes and risk so we can make a tremendous contribution to our colleagues beyond normal audit activities.”
On the importance of embracing change:
I strongly believe that if we, as auditors, do not evolve and change, we will soon become obsolete,” said Harsh Mohan, senior vice president of audit, compliance and risk for Etihad Airways. “Ninety percent of the job I did ten years ago has been automated.”
On becoming an alarm bell for high risks:
We had to change the mindset and behavior within internal audit,” said Peter Sneyers, chief auditor for Euroclear, one of the world’s largest providers of domestic and cross-border settlement services for bond, equity, exchange-traded funds and mutual fund transactions. “We had to ask more ‘so what’ questions, to focus on impacts and consequences, and to understand that we are not paid by the number of issues we find, but by the value we create.”
On building a culture of excellence:
We cannot just think we understand the business; we have to know that we do,” said Stephen Frimpong, vice president of internal audit at Kimberly-Clark. “We have to shape the audit plan to make sure we deliver impact and drive results.”
Starting to see a pattern here?
High performers set high standards and are not afraid to change. They hold themselves accountable to those standards with metrics and outcomes judged not by volume, but by the value created for the organization.
These are exciting times to be an internal auditor. The profession continues to rise to the ever-expanding demands created by the complexities of managing risks, monitoring controls, improving corporate governance and capitalizing on opportunities in international markets, and in our highly popular Internal Auditing Around the World series we will continue to track its growth and evolution. This series should be of great interest to internal audit professionals, as well as CEOs, CFOs and boards of directors worldwide.