The future of the internal audit profession

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 1 October 2006

914

Citation

Richards, D. (2006), "The future of the internal audit profession", Managerial Auditing Journal, Vol. 21 No. 8. https://doi.org/10.1108/maj.2006.05121haf.002

Publisher

:

Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited


The future of the internal audit profession

Never has there been a better time to be an internal auditor. The profession is evolving and growing throughout the world, as executive management and boards of directors discover the full value internal auditors bring to their organizations. In these exciting times, I sometimes stop, look around, and marvel at our success. But as President of The Institute of Internal Auditors (IIA), I am often asked, “What do you see in the future for internal auditing?” And I answer, “To know where you're headed, you have to know where you've been and where you are now.”

It is perhaps surprising to many that internal auditing is an extremely old profession. It dates back as far as 3500 BC, with the records of a Mesopotamian civilization. Early Egyptian, Chinese, Persian, Hebrew and Greek records also show evidence of internal control. Internal auditing has evolved since the early days of certifying receipts of grain brought to granaries, to what it is today. Modern-day internal auditors are professionals with an in-depth understanding of the business culture, systems and processes. Today's internal audit activity provides assurance that internal controls in place are adequate to mitigate the risks, governance processes are effective and efficient, and organizational goals and objectives are met.

Oh, how things have changed – our scope of work, the skills we must possess, even how the business world views us. As technology, globalization, organizational governance, and such trends as mergers and acquisitions have evolved, so has the internal audit profession. Higher expectations for increased accountability, more transparency, greater due diligence, and enhanced oversight have all contributed to growing professional opportunities in internal auditing. There is an overall movement toward solid organizational governance, to which internal auditing is essential. And we are seeing this trend adopted by all types of organizations in all sectors – not just publicly traded companies facing new laws and regulations.

One of our profession's challenges is clarifying for all stakeholders the internal auditors' roles, responsibilities, and true value. In actuality, they serve as management's and the board's safety net... The internal auditors provide assurance that policies and procedures are being followed. They monitor the ethical environment, corporate culture, and “tone at the top.” They examine and assess the organization's strategic, compliance, financial, reputational and operational risks. And they provide to management and the audit committee assurance that things are as they should be.

By shaping the perceptions of internal auditing – its purpose, its intended focus, its differentiation from other professions – we will demonstrate where we can add the most value. Because we are involved in all areas of the organization, we understand the employees, their processes and their objectives. Internal auditing brings to the table a composite of not only good business sense, but also in-depth knowledge of good internal controls and risk assessment. It is critical to effective operations, a proactive approach to problem-solving, and achieving organizational goals and to build a broad understanding of this, indeed, is an ongoing educational challenge. The good news is that, today, management and boards and other stakeholder are more aware of internal auditing's value than ever.

The IIA Research Foundation (IIARF) is working every day to gauge best practices, business cultures, governmental activities, and other forces that shape the global profession and environment in which we practice. All of our research to date has resulted in guidance that helps internal audit practitioners learn from others and become more proficient, efficient, and effective.

The IIARF's Common Body of Knowledge (CBOK) research project is critically important to the profession's future. It will allow us to broaden our understanding of how internal auditing is being practised around the world, and then anticipate global needs. As a result, we will be positioned to drive change for the betterment of tomorrow's global profession. As the profession's acknowledged leader, recognized authority, and principal educator, The IIA represents more than 120,000 professionals around the world. With 246 affiliates in 90 countries, we work to bring together internal auditors from all around the world to share information and experiences. Our challenge is not only to communicate the new information gained through this study, but also to share this collective wisdom, overcoming the barrier of language, culture, and geography. This is really the synthesis of globalization.

To ensure the future of the internal audit profession, we are partnering with academia to position internal auditing as a viable and wise career option for college graduates. The results of the CBOK study and other initiatives will be invaluable as The IIA works with universities around the world to develop college curricular, rather than solely depending on on-the-job training for skill development. Properly setting the stage so that college graduates can combine their fine computer skills, fresh passion, drive and fortitude with knowledge of internal audit fundamentals and best practices, will well position both those entering the workforce and the profession-at-large. This initiative – coupled with the requisite morale fabric, proficiency and knowledge – will help ensure the right talent is available to meet expectations we have set for ourselves as a profession.

In looking at everything we already know about internal audit best practices – considering where it has been and where we think it is headed – The IIA has set some clear priorities, including a greater emphasis on the importance of a balanced scope of work. Over time, the pendulum of focus has swung from financial to operational, and back to financial. The IIA, though, understands how important it is to utilize the internal auditors' expertise across the entire organization so that all risks, not just those with financial repercussions be assessed. This requires management and the audit committee to have serious discussions about the resources that will be devoted to internal auditing.

As we continue to develop statements on the profession and articulate them to influential decision-makers, it is critical we communicate the hallmarks of internal audit professionalism. Professional internal auditors practise in accordance with the Code of Ethics and International Standards for the Professional Practice of Internal Auditing; obtain the Certified Internal Auditor (CIA) designation, which demonstrates internal audit knowledge and competency, personal character and integrity, education, and experience; implement and maintain a quality assurance and improvement program; and participate in professional development opportunities for enhancing expertise.

To move this profession forward, we must analyze all of this information, all of our data, and all of our best practices – and identify gaps between what is today, and where we hope to see the profession tomorrow. We must have a specific vision, and draw a map to get there. At The IIA, through ongoing outreach and advocacy efforts, we will continue to focus on developing inroads, holding conversations, and building the types of relationships that will allow us to positively impact the future. I see the profession of internal auditing at a critical and exciting cross-road. Never have the challenges been greater or the stakes higher. The way that we as a profession respond to the opportunities on the horizon will determine our overall destiny for years to come.

Dave RichardsThe Institute of Internal Auditors Inc., Altamonte Springs, Florida, USA

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