According to Protiviti’s 2021 Next-Generation Internal Audit Survey, most of the chief audit executives (CAEs) and senior internal audit leaders surveyed reported that their teams are still in the early stages of, or have yet to embark on, their next-gen internal audit journeys. However, amidst the digital acceleration perpetuated by the COVID-19 pandemic and as internal audit teams face a more disruptive environment and demands to add value to their organizations, the positive news is that 66% of survey respondents report plans to increase their focus on innovation and transformation initiatives.
The benchmarking survey polled 874 executives in the first quarter of 2021, including CAEs, audit managers and directors across industries globally. Sixty percent have revenues of $1 billion or more. The survey revealed that only 14% of respondents identified their internal audit department as a “digital leader” – characterized as reaping benefits of next-gen internal audit practices given their higher reported levels of maturity in governance, methodology and enabling technology. These digital leaders clearly stand out as having greater skills and capabilities for aligned assurance, as well as an agile audit approach and technology and data usage. The survey also found 72% of digital leader organizations report having been well prepared for the shift to a remote working model at the onset of COVID-19, compared to only 51% of all other organizations.
Areas of Lowest Maturity
The survey asked respondents to rate their level of maturity for a variety of next-gen internal audit capabilities across governance, methodology and enabling technology, and identified the following areas as those of the lowest maturity:
- Machine learning (ML) and artificial intelligence (AI)
- Process mining
- Advanced analytics
With the four lowest areas of maturity all related to enabling technology, the survey reveals a clear lack of recognition of the link between effective governance and use of these technologies. Even among these lowest ranked areas, there was a stark disparity between digital leaders and other respondents, with digital leader organizations reporting a maturity level of 6.4 for advanced analytics compared to non-digital leaders who reported an average 3.8 maturity level on a 10.0 scale.
“After a challenging 2020 that required many internal audit functions to reprioritize projects, it’s now time to refocus efforts on embracing the next generation of internal auditing as the new normal. As many organizations shift into a hybrid work model, it’s critical that CAEs establish a clear road map to access and develop the skills needed for a next-gen audit function. For internal audit groups who are lagging in next-gen technology implementation, establishing frameworks for getting where they need to be with advanced analytics and other emerging technologies is of paramount importance.” – Brian Christensen, Executive Vice President, Global Internal Audit, Protiviti
The survey report includes benchmarking results derived from more than 60 questions and discusses recommended steps for a road map to a next-gen audit function. The report is available for complimentary download here along with a podcast discussion of the key takeaways. A free 60-minute webinar will be conducted on May 13 at noon PDT, featuring Christensen and Protiviti managing directors Jonathan Bronson, Nicole Minice and Andrew Struthers-Kennedy, to provide additional insights from the survey and discuss the implications for internal audit planning and priorities in today’s quickly evolving business environment. To join the webinar, please register here.