IIA-The Institute of Internal Auditors commissioned a report, "Vision 2035," to chart the future of the internal audit profession. Extensive research involving thousands of participants globally, revealed both opportunities and challenges. Key findings highlight the need for internal auditors to embrace technology, expand their skill sets, and shift towards a more advisory role, becoming indispensable strategic partners. The report concludes with actionable steps for the profession's evolution and the IIA's commitment to leading this change. Here is an abridged summary of the report.
Key Themes and Imperatives
The report identifies a critical juncture for the internal audit profession, highlighting that significant changes are needed to remain relevant. The core message is:
We must transform now or risk becoming irrelevant by 2035.
The following key themes underpin this transformation:
Transformation, Not Evolution: The report emphasizes the need for a major transformation, not simply a gradual evolution, to adapt to a rapidly changing world. This transformation requires a change in mindset, skills, and practices.
Strategic Advisor Role: The vision is for internal auditors to move beyond being perceived as solely compliance-focused "police" to become strategic advisors, providing "independent, risk-based, and objective assurance, advice, insight, and foresight."
Embracing Technology: Technology is identified as a key driver of change. Internal auditors must understand and leverage new technologies like AI, data analytics, and automation, and also understand the risks associated with these in their own operations and those of their organizations.
Expanding Skill-sets: The skills required of internal auditors will need to broaden, going beyond traditional accounting and finance to include technological expertise, strategic thinking, communication, and business acumen.
Shifting Balance of Services: A significant shift is required in the proportion of time spent on assurance vs. advisory services. The current split of 76% assurance and 24% advisory is expected to move towards 59% and 41% respectively. This change reflects a greater emphasis on proactive guidance and insights.
Talent Pipeline and Attraction: The profession needs to attract and retain talent by enhancing work experiences and promoting the value of internal audit. The report highlights the need for a more diverse talent pool.
Stakeholder Support: The transformation cannot occur without support from stakeholders, including boards, management, and external bodies. The IIA aims to lead the way in building this support and ensuring the profession serves the public interest.
Key Findings
Urgency for Transformation: "We must transform now or risk becoming irrelevant by 2035." This highlights the seriousness of the challenge facing the profession.
Current Perceptions: The report reveals that while internal auditors are viewed as "compliance-focused" and "independent", a concerning 48% also think internal auditors are regarded as the organization’s "police". This perception hinders the desired strategic advisor role.
Desired Future Perception: The desired perception is one where internal auditors are seen as "trusted advisors" and "change agents", moving away from being labelled as "boring" and focused only on compliance.
Technological Impact: 97% of respondents see increasing volumes of data and more complex data as impacting the profession, requiring "enhancing experienced internal auditors’ skills to stay relevant."
Skills Gap: Adaptability and learning agility are crucial now and in the future, with current skills gaps needing to be addressed, especially in technological areas.
Enthusiasm for the Profession: While most are excited by the prospect of adding value to an organization, being able to solve problems and have broad organizational exposure; “the majority reported that the greatest challenge internal auditors face is being misunderstood and undervalued.”
Shifting Scope: The audit scope is expected to expand to include areas like sustainability, third-party risks and strategic alignment, while current areas such as regulatory compliance will continue to be important.
Assurance vs Advisory: Internal audit professionals expect the amount of time spent on assurance services will decline from 76% to 59%, thus increasing efforts on advisory work from 24% to 41%. This indicates a major shift towards more forward-looking and proactive work.
Importance of Independence: While internal audit must be part of the organization, it also needs to be "scrupulously independent" to fulfill its mandate. "The key to being a strategic advisor is providing objective advice, which is enabled by being independent."
Understanding of Independence: Despite its importance, only 53% of those surveyed feel their organizations understand the importance of internal audit's independence “extremely or very well,” indicating a clear need to better educate the rest.
Strategic Link: 80% of senior professionals report that boards and senior management leverage internal audit to achieve organizational objectives, signalling the importance of alignment with strategy.
Talent Management: Internal Audit serves as a practical gateway to understanding different functional units, providing an excellent training ground for those who are seeking future executive positions. Rotation programs that encourage the movement of individuals from one area to another within an organization will help foster a greater breadth of knowledge.
Key Steps to Achieve Vision 2035
The report identifies several interrelated steps to achieve the Vision:
Shifting Mindsets: Moving from a more traditional, rule-based "Purist" approach towards a "Practicalist" and, ultimately, a "Proactive" mindset characterized by adaptability, confidence and innovation.
Embracing Emerging Technologies: Proactively using technology to improve audit efficiency and effectiveness. Auditors must also understand and address the risks associated with emerging technologies within the businesses that they are auditing.
Innovating to Add Value: Integrating the organization's strategy into internal audit services and expanding the scope of assurance and advisory services. This includes being forward-looking rather than simply reactive.
Gaining Organizational Support: Developing strategic plans that prioritize increasing the value provided by internal audit and engaging effectively with leadership to demonstrate its worth.
Revolutionizing Talent Management: Rethinking internal audit as a valuable experience to develop executive leadership skills and not just a career, with rotational programs to broaden experience for both auditors and other staff.
Importance of IIA Leadership: The IIA must take a leadership role in advocating for the profession, elevating it through the IPPF Evolution and increasing the visibility of the CIA certification, promoting collaboration and education.
The "Vision 2035" report provides a clear roadmap for the future of the internal audit profession. It is not simply a theoretical exercise; it is a call to action. The report stresses that the future success of internal audit hinges on its ability to adapt, transform, and embrace its role as a strategic advisor. Failure to do so risks the profession's relevance in the fast-changing global landscape. The steps necessary to achieve the profession's ideal future, "lie within the hands of the internal audit community, and the support of its stakeholders."
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