Audit committees gear up to oversee the internal audit function in its transition to the new Global Internal Audit Standards™

Talking points

• The Global Internal Audit Standards™ are now in effect and require internal audit functions that follow (or plan to follow) them to take action.
• Audit committees (and senior management) play a key role in supporting an effective internal audit function.
• Deloitte’s On the Audit Committee’s Agenda: Governing a relevant, effective, and valued internal audit function provides a detailed breakdown of essential governance activities.

The new Global Internal Audit Standards™ (Standards) took effect on January 9, 2025, a year after their release by The Institute of Internal Auditors (IIA) in January 2024. The Standards represent a significant advancement for the internal audit profession, introducing new and improved requirements to enhance the quality and effectiveness of internal audits. They also offer clearer guidance for audit committees to support internal audit functions. Many internal audit teams have already reviewed their practices to identify necessary steps to comply with the Standards.

How will they impact your organization?

The new Standards—the first update since 2017—aim to enhance the credibility and relevance of the internal audit function in a rapidly changing business environment. How? By increasing accountability and performance, keeping pace with increasingly complex and dynamic risk environments and rapid technological advances, and considering the latest governance practices and stakeholder expectations, among other goals.

Although they focus squarely on internal audit, the Standards reach beyond the internal audit function, recognizing the need for alignment with the board (audit committee) and senior management. With that in mind, let’s take a closer look at how the Standards may impact your organization.

Attributes of an effective internal audit function

The Standards highlight several key attributes and practices that demonstrate an effective internal audit function. Essentially, these attributes serve as a benchmark for internal audit functions to measure their performance against globally recognized standards that promote effectiveness. As such, they serve as a compass for carrying out internal audit activities with professionalism, consistency, and quality—ultimately adding value to the organization.

Deloitte has identified 10 attributes for audit committees to consider as their internal audit functions adopt the new Standards. Beyond attributes traditionally core to internal audit such as independence and objectivity, the Standards emphasize attributes necessary for continued relevance in an evolving risk landscape, including a focus on competencies necessary to address emerging risks, a dynamic risk-based approach, a balance between assurance and advisory services, and effective use of technology. For the full list and description of these attributes, click here.

Essential activities of the audit committee

So, what should audit committees consider as their internal audit functions adopt the new Standards? For starters, the Standards introduce a new concept known as “essential conditions.” These are foundational activities of the board (typically the audit committee) and senior management that should exist for the internal audit function to be most effective. Examples include having a governance framework that provides for a clear and appropriate internal audit mandate and open and transparent communications between the internal audit function, management, and the audit committee. For more information on the essential conditions, including those outlined for senior management to support, champion, and promote the internal audit function, click here.

Audit committees set to steer the rollout

While more mature internal audit functions may already be in sync with the new Standards, many others are discovering they need to take specific steps for stronger alignment. Audit committees play a crucial role in overseeing the internal audit function’s implementation and adoption of these new Standards. By staying informed and proactive, audit committees can help their organizations navigate the complexities of the new Standards and unlock greater value from their internal audit activities.

Considerations for the audit committee in supporting adoption of the new Standards include:

• Oversight and guidance: Providing oversight and guidance to the chief audit executive regarding the implementation of the new Standards and determining alignment with the related essential conditions and information needed from the chief audit executive.
• Resource allocation and readiness preparation: Determining if the internal audit function has the required resources, including budget and personnel, to implement, adopt, and conform with the new IA Standards.
• Stakeholder communications: Communicating and collaborating with key stakeholders, including management and the external auditors, about the changes and implications of the new Standards.
• Performance and progress monitoring: Providing input to the chief audit executive as to the function’s strategy, performance objectives, and performance measures, considering the Standards as the baseline for expected performance.
• Maturity expectations: Communicating expectations to the chief audit executive about areas the audit committee prioritizes in assessing maturity for the internal audit function beyond just conformance with the new Standards—and understanding the resources needed to achieve the desired maturity.

What role can Deloitte play?

For audit committees, understanding the new Global Internal Audit Standards™ and their implications is central to helping the organization effectively leverage its internal audit function. Deloitte can advise both audit committees and the internal audit function about conformance with the new Standards and share our latest perspectives to help you keep up with the evolving demands of the business. Feel free to reach out to us with any questions.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.