Once considered primarily a compliance role, the internal audit function has expanded to provide a unique, and important, perspective that can greatly influence decision-making. Today’s internal audit experts provide a broad view, whether or not the company has a fully outsourced, completely in-house, or “co-sourced” internal audit function. Here is how to think about the internal audit role under today’s expectations and how to make the most of the expertise that can be implemented within the internal audit function.
What Is Internal Auditing?
One way to view the role of internal auditors: They are explorers. They are looking out for issues and opportunities that have been overlooked or not yet considered. Where are the knowledge gaps or blind spots within the company? Internal auditors are trained to have a close understanding not only of the most immediate risks facing the company but also emerging risks and promising opportunities.
They offer a unique ability to do this work because they make a point of gaining a deep understanding of the business—they know the right questions to ask as they meet with the different areas of the business.
What does internal audit do? According to the Institute of Internal Auditors, internal auditing is:
An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
While the internal audit process and the function itself has evolved, internal audit experts have continued to have a focus on corporate governance, internal controls, and risk management. What’s changed is the role’s value has been realized at many companies in terms of helping seniors leaders be more aware of key risks and to help them think through issues more thoroughly—while also being able to provide a big-picture view that is relevant.
Companies that have raised the level of the internal audit function have turned it into a strategic business asset—an important aspect of making smart (fully informed) decisions.
Expanding Responsibilities of Internal Auditors
Today’s internal audit function can have a positive influence on decisions that lead to growth. Internal auditors are not solely focused on financial risks, although that is an important responsibility. Their SWOT (strengths, weaknesses, opportunities and threats) analysis takes a forward-looking approach to bring attention to ways the company can build on its strengths and seek new opportunities, such as a new product line or a geographic expansion. They can help to set the stage for a strategic initiative—by providing an informed view toward the next steps the company could take.
So, in addition to “explorers,” you could also consider internal auditors to be strategic advisors, collaborators and, most definitely, risk experts, in addition to compliance pros. Here is how this function’s responsibilities fall under the labels:
Strategic advisors: The internal audit function can be steered more toward this role, to provide objective critical thinking that leads to actionable insights and better informed strategic moves.
Collaborators: While internal auditors aim to provide an objective view, they can work closely with business leaders to understand their unique challenges and consider the emerging risks and opportunities that are pertinent to them.
Risk experts: Internal auditors look beyond financial risks to broader emerging risks and can help the company prioritize how they address them. These are risks that could have a detrimental effect on the business strategy or perhaps raise an opportunity if the risk could be an issue that’s affecting a competitor.
Compliance pros: Core to the function, the internal audit team pays close attention to the constantly evolving regulatory landscape, and helps the company stay on track with its regulatory obligations.
Defining the Internal Audit Function at Your Company
Rarely does an internal audit function evolve organically without some support. Outside experts can help to build, transform, or enhance the internal audit team to provide consistently critical thinking and actionable insights that can aid the company on its forward trajectory. This is how the internal audit function can become a strategic partner for new initiatives, whether the company is pursuing an M&A opportunity, a new system implementation, or the addition of a product in its portfolio. The internal audit function offers a unique perspective that can be noticeably beneficial to the future decisions of the business.
Looking to develop your company’s internal audit function or address a skills gap? Learn about RoseRyan’s Internal Audit Solution.
