EY ROMANIA

  |  2013-08-29

EY and Forbes Insights: Internal auditors, from assurance specialists to strategic advisers

Expanding the role of internal audit involves challenges regarding resources

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As regulators, business people demand more from internal audit. Also, external auditors rely increasingly more on the work of internal auditors, while shareholders ask a greater degree of assurance regarding financial control mechanisms. In their turn, regulatory bodies also analyze the degree of compliance of companies operating in an ever-changing environment. To meet these increasingly larger expectations, internal audit should turn away from the original compliance function to a business strategy function.

 

More than 500 chief audit executives and audit committee members underscored the need for the internal audit function to adopt a more prominent role within organizations, according to the new survey developed by EY and Forbes Insights. While only 28% of survey respondents said that internal audit currently plays a truly strategic role, 54% indicated that being a strategic advisor will become their primary mandate, signaling a radical shift in focus. 

 

The study, Global Internal Audit Survey: Matching Internal Audit talent to business needs,  cited market volatility, financial instability and rapid technological change, coupled with consumer and regulatory demand for increased visibility of a company’s operations, as the main factors putting pressure on internal audit to broaden its scope and move beyond its traditional compliance focus.

 

“The clear message from the survey is that internal audit functions need to stop thinking about themselves as simple compliance specialists and start taking on a much larger, more strategic role within the organization,” said Brian Schwartz, Internal Audit leader, Ernst & Young. “Internal audit is increasingly being asked by the management team and the board to provide broader business insights and better anticipate traditional and emerging risks, even as they maintain their focus on non-negotiable compliance activities.”

 

This shift may also necessitate that companies rebalance their assurance and advisory audits. 96% of survey respondents said that advisory comprises at least some portion of their audit plan. Finding the right balance between the assurance and advisory audits will be critically important as organizations’ risk tolerances and strategic goals change.

 

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