Emerging Trends in Internal Audit for 2021
With the pandemic firmly behind us, along with its associated uncertainty and crisis management requirements, internal audit is now in an interesting position to guide organisations through a completely new landscape of risk. New trends have emerged in internal audit that will change the way we perceive audit for years to come.
The evolving role of internal audit
Over the past few years, internal audit has re-positioned itself as an influential function within a company, identifying key risks and taking an advisory role to decision makers. This new importance was heightened by the events of 2020, between the global Covid-19 pandemic and its effect on the economy, the challenging labour market, new global leaders and influential social movements causing disruption to many processes and creating substantial risks.
Internal audit is now under greater scrutiny to be able to efficiently identify key risks and guide organisations through the next few years.
Related challenges facing the external audit profession
With the pressures presented by the last 12 months, the external audit sector is facing the challenging prospect of meeting higher expectations from all angles. According to PwC, more stakeholders are interested in – and depend on – the accuracy of financial reporting than ever before, while shareholders are demanding auditors give a more forward-looking assessment of an organisation’s health.
On a consultancy level and for internal auditors, increased scrutiny and the need to provide tangible support to operations will be the biggest challenge to overcome in the months and years ahead.
3 Emerging trends in internal audit 2021
- Artificial Intelligence (AI)
AI has been a swiftly accelerating trend across most areas of business in recent years, and as such, brings risks and challenges to overcome alongside the benefits. Internal audit has already proven its worth in helping to integrate governance, controls, and risk management across automation initiatives during digitisation, transformation or change management processes.
This trend is only likely to become even more prevalent for internal auditors as more organisations of all sizes and sectors initiate automation programmes.
- Soft controls and company culture
Company culture is becoming an increasingly important subject to many organisations and has been pinpointed as an important part of any company’s talent attraction and retention strategy. When top talent is in scarce supply, company culture and employee satisfaction should be a top priority for all.
Internal audit has recently positioned itself at the centre of company culture by providing assessments of company values and purpose. Soft controls will continue to be experimented with to provide further assurance of the effectiveness of a company culture.
- A holistic approach to third-party risk management
Internal audit has had a greater focus on assessing third-party vendors’ means to support themselves with a robust framework in place should there be future disruption to supply chains. Beyond contract management, internal audit will examine the proficiency of remodelled supply chains and assess the risk they pose.
Innovative audit techniques
While there is already a great prevalence of technology specific to the audit sector, three tools are truly bringing innovation to individual organisations. These include:
- AI applications
Advanced machine learning techniques are proving invaluable in accurately analysing mass amounts of information for review, saving time and money.
- Diagnostics tools
Using visualisation to identify an organisation’s operational and finance functions, diagnostic tools can be used to benchmark them against market averages.
- Bespoke analytics solutions
Suites of technology are becoming increasingly popular across many areas of business, but those designed for internal audit are becoming increasingly intuitive and can illuminate many of the challenges posed from the acquisition of data.
3 key risks to internal audit
- Cyber security in the remote world of work
Internal audit controls and safety measures are at greater risk with a remote workforce working on unsecured WiFi connections. Cyber attacks have significantly increased over the last 12 months as a result and there are greater risks of a data breach.
- Changing regulatory risks
Both domestic and international compliance is required, and as the dust begins to settle from Brexit, organisational governance and compliance will become even greater priorities – particularly for those organisations with international clients or offices.
- Data and analytics processes
There are many tools available to help data collection and management, and whilst this can provide an exceptional opportunity for business decision making and development, it also poses the challenge of finding the right applications to meet an organisation’s unique needs. Audit should assist in the creation, integration, and deployment to conduct appropriate checks and controls to ensure it is entirely fit for purpose against costs.
Building your internal audit team
Barclay Simpson is an international recruitment consultancy that specialises in recruiting professionals for the interrelated disciplines of Governance, namely Information/IT Security, Risk, Resilience, Audit, Compliance, Legal and Treasury. When you’re looking to build and secure your organisation for years to come, Barclay Simpson can help you quickly build a technically proficient internal audit function and team.
Get in touch for support in hiring internal audit professionals