Advanced Internal Audit analytics, robotic process automation and Agile Internal Audit among key innovations anticipated by Chief Audit Executives
NEW YORK, NY, USA, 10 May 2018—Innovation is key to improving the impact and influence of the Internal Audit function according to Deloitte Global’s new Chief Audit Executive (CAE) report, “The innovation imperative.”
The new report represents feedback from more than 1,100 Internal Audit leaders across 40 countries and a wide range of industries and points to insights and ideas that Internal Audit functions can consider to help meet their organizations’ needs, now and in the future.
“In today’s climate of constant disruption, many businesses are employing new business models and new technologies, and partnering with third-parties in new ways,” says Terry Hatherell, Deloitte Global Internal Audit leader. “As organizations seek to harness risk for value creation, the Internal Audit function must go beyond delivering traditional compliance and focus on far more innovative approaches to providing assurance, delivering advisory services, and anticipating risks.”
This will require innovation. When asked what they believe will be the key innovative developments impacting Internal Audit over the coming three to five years, respondents indicated that data analytics (22 percent), Robotic Process Automation (RPA)/cognitive technologies (15 percent), predictive analytics (14 percent), risk anticipation (13 percent) and adopting Agile Internal Audit (8 percent) will transform the Internal Audit function.
“These findings reinforce that Internal Audit groups are aware of the need for Internal Audit to innovate, and many have begun along that journey – now it’s a question of expanding their understanding of the tools and methods available to facilitate it,” says Neil White, Deloitte Global Internal Audit Analytics leader. “Embracing innovation will be critical for Internal Audit to secure the impact and influence it needs within an organization.”
The report highlights a notable connection between investment in innovation and Internal Audit’s impact and influence within an organization. Internal Audit functions with strong impact and influence have improved to 40 percent, up from 28 percent in the 2016 survey findings. But that still leaves 60 percent of responding CAEs who believe their functions lack strong impact and influence. In general, the results of this survey indicate that groups who have adopted innovative approaches and methods tend to have greater impact and influence than those that have not. For example, among CAEs who believe they and their functions have high impact and influence, 71 percent plan to increase their investment in innovation.
It’s important to keep in mind that innovation goes beyond adopting technology—it can also include taking new approaches to enhance not only the value the function delivers to the broader organization, but the ways in which they present that value to management, the audit committee, and other stakeholders. As Internal Audit groups consider how to deliver value to their evolving organizations, CAEs see the function’s leading strategic priorities as implementing Internal Audit analytics, strengthening talent pipelines, enhancing partnerships with the business, and enhancing quality. Many are also considering adopting an Agile Internal Audit approach and utilizing cognitive technologies and RPA to enhance the value they deliver to their organizations.
“Yet, Internal Audit groups need to proactively address certain issues if they are to deliver on these strategic priorities. For example, more than one-third of surveyed CAEs cite missing skills and talent as a key challenge—but nearly one in four still do not use alternative resourcing models to access those specialist skills. And analytics talent, in particular, is in short supply,” continued White. “According to our survey, 56 percent of Internal Audit groups still use analytics at basic levels. There is great opportunity to leverage advanced analytics to free up resources to partner with the business, enhance quality and efficiency, and to deliver automated assurance and risk anticipation.”
Additional report highlights from survey respondents:
About the report
Deloitte Global’s “The Innovation Imperative,” report is based on a 2018 survey of more than 1,100 Chief Audit Executives from across 40 countries and a range of industries. The full report can be found at www.deloitte.com/globalCAEsurvey.