The business world is constantly changing. Internal auditors increasingly need to embrace ongoing changes to the business. They also need to understand changes to key drivers, such as the regulatory environment, the profession, and the social and political landscape.
To do so, internal auditors must maintain a meaningful dialog with senior management, so as to understand their changing needs and expectations.
An internal audit work plan that aligns neatly with the primary risk concerns of senior management and other key stakeholders ensures that the audit effort is directed at the areas that are likely to add the greatest value to the organization.
Because of the increasing complexity associated with running an organization, internal auditors must ensure that their recommendations translate into improved business processes and effective risk management, governance, and control arrangements.
Internal auditors need to have the capability to deliver a product that meets or exceeds the expectations of senior management.
Internal auditors must also be able to tell their story to maintain their influence, relevance, and credibility within the organization.
The Changing Environment
“The internal audit function has evolved from corporate cop to that of a savvy in-house consulting service.”1
Internal auditing in the twenty-first century imposes even greater demands on the professional internal audit staff, whose role has expanded to combine both an assurance and a consulting service to management. Internal audit charters have been broadened considerably to reflect these demands.
The chief executive of the Institute of Internal Auditors in Australia (Christopher McRostie) has reflected:
“In rapidly changing and increasingly complex business and regulatory environments the internal audit function has evolved from corporate cop to that of a savvy in-house consulting service that not only reports problems, but that also gives constructive suggestions to line managers about how to improve the performance of the business.”2
Internal audit staff are being increasingly relied on to provide organizational expertise in risk management, internal control, and governance processes as a consequence of the emergence of stronger corporate governance demands across the world. Internal auditors need to have strategies in place that allow them to remain abreast of trends and emerging issues within their organization and the broader business community.
Contemporary internal auditing practitioners need to apply a strategic approach to understanding the key organizational value drivers and positioning themselves to meet the expectations of senior management.
Internal auditors are well placed to influence senior management in setting the right tone at the top. This, in turn, is a powerful way to nurture an organizational culture that is consistent with the values, risk tolerance, and strategies of senior management and the board.
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