The document discusses challenges, dilemmas, and suggestions for the future direction of internal auditing. Some of the key challenges mentioned include keeping pace with stakeholder expectations, providing value in a complex risk environment, and incorporating new technologies like artificial intelligence. Dilemmas center around issues like independence versus collaboration, and balancing assurance and advisory roles. Suggestions focus on looking ahead to emerging risks, acquiring new skills in areas like IT auditing, thinking strategically, and taking an agile approach through collaboration. Overall the document emphasizes that internal auditing must innovate and disrupt itself in order to stay relevant in a rapidly changing business environment.
4. 4
2. Challenges
The progress and
successes of Internal
Audit (IA) over the past
years, will not be enough
to carry the profession
forward. Already some
recent studies indicate
that IA is losing ground in
trying to keep pace with
stakeholder expectations
and in providing value.
5. 5
2. Challenges
How Internal Auditors :
Stay Relevant & Provide Value
in this complex and volatile business
environment, with changing risk landscape,
geopolitical uncertainty, increased regulation,
rapid technological changes etc.
6. 6
2. Challenges
“AI will not replace auditors,
but auditors using AI will
replace those not using AI”
Quick Poll (2/18) IIA’s
TAT: Q: IA incorporates
AI in its activities?:
A: 65% not at all
7. 7
2. Challenges
“World Economic Forum forecasts
that delays in adopting sound
cyber security hygiene could result
in a US $3 trillion loss in economic
value by 2020.”
CYBER CRIME is a growing
and persistent threat
8. 8
2. Challenges
A lot of scandals (e.g.
FIFA, Volkswagen, Wells
Fargo, United Airlines,
UBER) were caused by
CULTURES that
encouraged inappropriate
behaviour.
Peter Drucker:
“CULTURE eats strategy
for breakfast”. !!!
High reputation risk. So
IA should also focus on
auditing culture.
9. 9
2. Challenges
Image of Internal Auditors:
Are we (sometimes) perceived
as people who look at the past
or miss the forest for the tree?
11. 3. Dilemmas
11
Full
independence &
objectivity
OR “get a sit on
the table”
Pure 3rd line
of defence OR
Blurring of
2nd & 3rd
lines of
defence
New std as of
2017, #1112
“Chief Audit
Executive
Roles Beyond
Internal
Auditing”
12. ▸ IA should not operate as an island.
▸ The need for independence &
objectivity does not imply isolation.
12
3. Dilemmas
“When CAEs were asked about
potential strategies to address
disruption, collaborating with
other lines of defence was the
most common approach taken”
IA needs to cooperate with other
resources in the organization.
13. Different expectations
between what the
Board/AC wants, and
what CEO wants from
the IA?
13
3. Dilemmas
Who’s your boss? Serving 2 “masters”?
•
Is this a “role dilemma” ?
•
Being both “watchdog”
& “consultant” ?
•
“assurance” Vs “advisory”
14. 14
3. Dilemmas
Importance of personal
attributes of CAE
CAE to voice
his/her opinion in
controversial
issues OR not ?
Keep up the
courage!!!
15. •
Look ahead into the future
•
Focus on emerging risks & evaluate
promptly
•
Focus more on IT (e.g. cybersecurity, use of
data analytics in audit process)
•
Acquire new talent and new skills
•
Think strategically
•
Focus on what really matters 15
4. Suggestions
16. 16
4. Suggestions
“the only way to
successfully navigate the
changes & manage the
disruptions is
by changing our thinking
& becoming agile”
TRANSFORMATION OF IA
“we need innovative
strategies & an agile
approach supported by
the right talent”
Agility involves
close collaboration
across audits,
auditors & clients &
responding to
changing needs.
17. ▸ Face challenges & dilemmas with
creativity & courage, to stay relevant
& close the expectations & value gaps
▸ look ahead into future
▸ innovate, through talent & IT, to
audit smarter, better & faster
▸ cooperate with other resources within
co, & help co anticipate & respond to
emerging risks & business disruption
▸ disrupt ourselves, be adaptive/agile &
get out of our comfort zone
17
5. Closing RemarksWe have been successful so far, but we must:
18. 18
5. Closing Remarks
We must lead by example
and inspire ETHICAL
BEHAVIOUR
“Example is not the main
thing in influencing
others. It is the ONLY
thing”. Albert Schweitzer
But... above all:
19. ▸ Global perspectives and insights: Internal Audit in the Age of
Disruption, The IIA’s AI Auditing Framework (B), IIA 2018.
▸ Tone at the Top, Feb. 2018, IIA, Audit Executive Center.
▸ Risk in focus: hot topics for Internal Audit 2018, EIIA.
▸ IIA’s Standards, www.theiia.org.
▸ Five IA resolutions for 2018 and beyond, Chambers, Internal Auditor,
Jan. 2018.
▸ The future of cybersecurity in Internal Audit, A joint research report by
the IA Foundation and Crowe Horwath, 2018.
▸ 2018 North American pulse of internal audit - The Internal Audit
Transformation Imperative, IIA Audit Executive Center.
▸ 2017 and 2018 PWC’s State of the Internal Audit Profession studies.
▸ Can Internal Auditing Become Agile? Seven keys to thinking the
unthinkable, Steve Denning, March 2017.
▸ Economia, ICAEW, Jan. 2018.
▸ Independence is a challenging concept for IAs, Drainerlenz, Feb. 2018.
▸ AI will not replace auditors, but auditors using AI will replace those not
using AI, J. Bednarek, March 2018.
19
Sources