As audit committees face a wider range of business risks and increased expectations from stakeholders, many audit committees are turning to a particular resource—the internal audit function.
Internal audit (IA) can be viewed by audit committee members as an objective insider—one that can serve as their eyes and ears.
According to PwC’s 2016 State of the Internal Audit Profession Study audit committees can get the most out of internal audit by empowering the role, having a team with the right structure and skills, making sure the mission is clear and is adhered to, supporting findings to drive organizational improvements, and assessing performance of the team to enhance talent development.
The Institute of Internal Auditors Tanzania (IIA) this week is hosting the 4th Board and Audit Committee Forum. The two day forum involves presentations and panel discussions with distinguished thought leaders who year over year have shared their valuable experience, knowledge and insights to re-energize participants with new perspectives, latest trends and best practice which they can immediately apply in their roles.
I have asked myself since the 3rd Board and Audit Committee Forum… what may be different? Has there been any change or do the issues of the prior year paint the same picture of an IA function today? Do audit committee members view their internal audit functions as their eyes and ears?
We all recognize that internal audit functions that possess strong capabilities and effective leadership can make significant strides towards becoming a highly valued and trusted advisor. The 2017 State of the Internal Audit Profession Study, PwC has identified a new factor contributing to a stronger perceived value: Internal Audit’s ability to help stakeholders navigate disruption.
While the concept of disruption isn’t new, I do feel like we’ve now hit more of a common realization, that it is not a blip or a few one off incidents affecting specific companies, but something that we all need to prepare for and expect going forward. Disruptions are affecting us all – whether they be internal as a result of changing technology or external resulting from new regulatory changes. Less of us are immune to some of these risks than were so in the past.
Therefore, more comfort is expected by boards and stakeholders around different types of assurances and they are all looking to Internal Audit to provide that.But frankly speaking, I doubt that many of us, whether as internal auditors or board and audit committees, have fundamentally changed how we operate in the face of these challenges. Looking forward, audit committees should reflect on their role in overseeing internal audit which is a cornerstone of their governance responsibilities. Helping maximize the value of the internal audit function is a critical factor in the audit committee’s effective oversight. High on the list should be the audit committee’s focus to empower and develop the Chief Audit Executive (being the head of internal audit).
Internal audit functions with effective leadership perform better and add greater value to their businesses. As the geopolitical landscape and global economy change, a high-performing internal audit function aligned to an organization’s strategy will be a trusted advisor to help the audit committee meet its objectives.
Jacqueline Abebe, Associate Director - Risk Assurance Services, PwC Tanzania The views expressed do not necessarily represent those of PwC