The results of a new survey indicate that internal audit’s ongoing digital transformation could accelerate in 2021. The survey, conducted by AuditBoard and the Institute of Internal Auditors’ Internal Audit Foundation (IAF), finds that internal audit functions plan to increasingly adopt cloud-based software platforms. Nearly a quarter (22 percent) of respondents say they will implement cloud-based technology this year, resulting in a majority of internal audit teams using a cloud-based audit management or GRC software solution for the first time.
Their planned increase in the usage of cloud software shows that internal audit departments are moving closer to the cloud technology adoption rates of other enterprise functions like IT. The top challenges internal auditors said they experienced in 2020 provides an explanation for the substantial increase in their planned adoption of new cloud technology in 2021:
- A majority (52 percent) of respondents said identifying and evaluating new and emerging risks was their top challenge in 2020.
- Forty-three percent mentioned the need to collaborate remotely with internal and external audit stakeholders.
- Communication and follow-up with business owners was considered a top concern by 38 percent on internal audit respondents.
“Many internal audit teams that have not yet shifted to a cloud approach are now set to reap the benefits of modernization — including gaining greater bandwidth for strategic, value-add activities — and will be better positioned to protect their organizations from new and emerging risks,” said John Reese, chief marketing officer of AuditBoard. “They’ll also get to equal footing with other functions within their organization who have already made the move to cloud-based solutions.”
Internal auditors use audit management and GRC software to manage a wide variety of activities, from risk identification and evaluation, to the automation of administrative and repetitive tasks, which can free up teams to focus on bigger-picture items. According to the survey, the top three use cases for audit management software are: document management, issue and action plan management, and testing and work reviews.
“While automation of administrative functions offers clear and immediate benefits, internal audit is discovering the technology’s potential to drive departmental and business value,” said William Michalisin, chief operating officer of the IIA. “As this report suggests, technology doesn’t merely complement the internal audit function, it’s crucial to more effective practices, allowing us to focus where it matters most and to elevate our value to stakeholders.”
The use of cloud-based technology by internal audit teams continues to grow for two major reasons, according to the survey: the need to modernize and a requirement for fewer manual processes. In particular, modern, cloud-based platforms offer improved agility, productivity, and collaboration across distributed organizations.
Survey responses echo these benefits:
- Nearly half (45 percent) of internal audit professionals using manual technologies and methods agreed that their approach limited effectiveness and prevented the delivery of optimum value.
- Thirty-one percent of internal audit functions that are already using audit management or GRC software increased their use of such software in 2020, most notably to collaborate remotely with internal and external stakeholders and avoid wasting time and resources on manual and administrative tasks.
- Of organizations already using cloud-based technology, 46 percent increased their usage of the technology as a response to the 2020 pandemic.
“Internal Audit teams are clearly accelerating digital transformation in 2021, a sign that the challenges of working without cloud technology over the past year have been significant,” added Reese. “As the world emerges from the pandemic, internal audit leaders are turning to contemporary audit and risk management solutions to stay on top of the dynamic risk environment, improve organizational responsiveness, and enable close coordination across their distributed workforces.” 