We know from Protiviti’s 2021 Next-Generation Internal Audit Survey that most internal audit groups have been slow to adopt next-gen technologies and upskill their teams in preparation for the future of work. But the survey also found that those who are ahead of the pack and are “digitally mature” are reaping the benefits of next-generation practices and adding value to the business due to their use of:
- Data and other enabling technologies, like robotic process automation (RPA)
- Emerging technologies, such as artificial intelligence (AI) and machine learning
- Advanced techniques like process mining
So, what if your internal audit team falls somewhere in the middle? You’re on the next-gen journey and striving to become more digitally mature, but you’ve stalled out or need more guidance? Or, what if you need to raise your maturity quickly because the business is counting on you to be a strategic partner and adviser in time of significant change?
You and your internal audit team could likely use some inspiration — as well as some confidence that you’re heading in the right direction. You’ll find both in Protiviti’s latest edition of Internal Auditing Around the World, our annual compilation of profiles of excellence in internal audit from companies across the globe.
AI, machine learning, data science and more
The theme of Internal Auditing Around the World, Volume VXII is building business resilience — a topic inspired by disruption due to the COVID-19 pandemic. What we learned through our interviews with internal audit leaders is that the functions most successful at pivoting with change, and helping the business to do the same, are those that had already embraced a next-generation internal audit mindset and practices and expanded their use of technology long before the global health crisis hit.
Because they were already technology-enabled and understood the vision for the next-generation function, these teams could be more nimble, creative, and yes, resilient amid the disruption. Here are some examples:
- A group internal audit function at a Singaporean multinational banking and financial services corporation has widely adopted agile methodology practices and expanded its use of data analytics and automation of processes to increase efficiency and help perform the entire audit process in real time and make it more effective. The function’s data-driven operating model (DDOM), which includes the use of machine learning, allows the team to perform dynamic risk assessment and highlight risks before the audit is even conducted so that they can be mitigated ahead of time.
- At a UK-based independent automotive distributor and retailer with operations across five continents, the internal audit group has strengthened its IT and program assurance capabilities to help support the business as it pursues digital and other transformational activities. The function is working to ensure it’s “digitally fit” for the future, expanding its use of data analytics and automation and investing in ongoing training and development for the audit team.
- The internal audit function at a digital telecommunications company based in the Middle East launched a business resilience initiative in 2015 to create continuous control and risk monitoring processes. That work led to the team’s use of AI for detecting exceptions and eliminating false positives. They are now building on this work, using AI and automation to perform continuous audits across high-risk areas and strategic audits that add more value to the business.
No time to waste
In the foreword to Internal Auditing Around the World, Brian Christensen, Protiviti Executive Vice President and Global Leader of Internal Audit, wrote, “It’s been a challenging road of transformation for internal audit as a profession, and one that’s far from finished.” He noted that many of the functions spotlighted in this year’s publication are well along that road, while others at least have a “detailed map” to follow into the future. Among those whose journey is ongoing are:
- The internal audit organization for a leading online travel company that felt the impact of pandemic-related travel restrictions acutely is working to amplify its use of data analytics as part of its continuing efforts to help increase overall business resilience. It’s already hired a full-time manager to lead its analytics efforts and has brought in a data scientist, as well.
- The internal audit function at a U.S.-based semiconductor company has helped the business to increase resilience by conducting specialized audits, including one focused on cybersecurity strategy for manufacturing operations. The outcome of this audit, which included an assessment of ransomware attack risk for manufacturing facilities in Singapore and elsewhere, resulted in a reset of the strategy and an accelerated implementation of improvements.
- A global provider of financial products and services recently began using RPA for Sarbanes-Oxley-related audit activities. Its internal audit team now looks to expand use of this technology for risk assessments. They also intend to advance the data analytics program they’ve been building for several years so that they can perform complete audits of key areas within the organization and rely less on audit sampling.
What the latest edition of Internal Auditing Around the World makes clear is that while many functions are making progress on their next-gen journey, their evolution is far from complete — but they are examples by which to be inspired to start, or to keep going. Adopting the right combination of enabling, technologies and investing in talent with the necessary skills to support and advance digital initiatives are vital steps to becoming a next-generation internal audit function.
Like all major transformations, success on the next-gen journey hinges on having a strategic vision for change from the outset. That said, it’s also OK to start small while thinking big. Whether you’re automating processes or creating simpler but more high-impact, data-driven reporting, any progress toward modernizing your work so you can add more value matters.
To learn more, see this post about five next-gen acceleration strategies. You can download Internal Auditing Around the World, Volume XVII or any previous editions of this publication from our website.