Enhancing the strategic value of Internal Audit | KPMG | AU

Enhancing the strategic value of Internal Audit

Enhancing the strategic value of Internal Audit

Survey findings show there is a consistent disparity in the views of executive stakeholders and internal auditors regarding the strategic role of Internal Audit (IA).

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Partner in Charge, Internal Audit, Risk & Control Services

KPMG Australia

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Bulb with golden filament

Is internal audit best described as a ‘strategic’ or ‘support’ function for your organisation? This question about the role of Internal Audit forms the basis for two separate surveys conducted by KPMG International.

In 2015, KPMG International and Forbes surveyed more than 400 Chief Financial Officers (CFOs) and Audit Committee Chairmen on a host of issues regarding the performance, focus, value and future of Internal Audit (IA) functions at their organisations. The findings called attention to a ‘value gap’ between what Audit Committee Chairs and CFOs identify as priorities and what they are receiving from their IA functions. In 2016, KPMG surveyed over 100 Internal Audit professionals to get their perspectives on the roles and responsibilities of Internal Audit and how they see the role of IA evolving. 

Heeding the call

The key finding gleaned from the survey is that CFOs and Audit Committee chairmen (executive stakeholders) envisage a more strategic role for internal auditors than the auditors see for themselves, and it is up to internal auditors to take the initiative and broaden their responsibilities. 

When respondents were asked whether internal audit is a strategic or a support function, more of both groups say it is strategic, but 99 percent of executive stakeholders say so, compared with only 60 percent of auditors. Normally one would expect internal auditors in larger numbers to say their role is strategic, but their responses show that a strategic role is more aspirational than actual.

Bridging the gap

It’s fair to say that internal auditors and executive stakeholders do not see eye to eye on a range of issues. In fact, in almost all cases, internal auditors and executive stakeholders do not agree on the most important attributes of IA. The one exception is that, when asked to choose the skills needed to be an effective internal auditor, both sides agree that communication talents are important.

Three key implications

For internal auditors to meet (or exceed) these raised expectations, three important things need to happen:

  1. They must become more deeply involved in business matters, and not just in dealing with questions about processes, controls and compliance.
  2. They need to do more to leverage technology, not just to help increase efficiency but also to improve the quality and depth of the insights being delivered to the business.
  3. They need to view their activities through the lens of business value. 

This transformation is a chance for both IA and the organisation it serves to achieve a higher level of performance. 

Download the PDF report to review the findings in more detail.

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