At the top of the list of to-dos is setting out a deliberate strategy to embrace more advanced technology in the internal audit department, particularly when it comes to finding the right personnel and how tech and talent fit together. “The most significant finding is really how technology and talent need to be in lock step,” says Massey. “In the past we have had a tendency to run to the shiny new technology toy without necessarily thinking about what that does for my talent model. And more importantly, how should I think about my talent model as I’m evaluating which technologies and tools I need to invest in?”
Moving up the technology spectrum:
- Create a deliberate strategy of thinking through the talent model along with the technology that you are considering of adopting and think about how those elements fit together.
- Refocus toward an agile foundation that allows you to make quicker shifts. What are the risks that technology brings? Use technology in your department, so you can better understand the organization’s use of it and where the risks are.
- Providing the training to enable the existing staff to make better use of technology. Courses on data analytics, agile project management, cybersecurity, artificial intelligence, and many other technology areas can be found online.
- Leverage the work of other departments. Internal audit can benefit by examining how other departments adopt technology and by bringing technology savvy individuals from such departments as “guest auditors.”
- Plan for change. “Many internal audit departments are still struggling to develop a formal methodology for integrating data analytics. It is critical for these departments to formalize a data analytics program that specifies how data is to be identified, acquired, and analyzed,” the Protivity report warns.
The next step is maybe the hardest change to make, since it involves changing the very foundation of internal audit, but internal audit must adopt an agile approach and mentality of change to move higher on the technological advancement spectrum. “Decisive moves by CAEs will propel internal audit forward through the transformation required,” says IIA’s Chambers.
Internal audit must also address the talent that is already in the building and that requires training. Most folks are interested in improving their skill sets to advance in the department and are eager to train in new technologies that will help them advance, the PwC report finds. Since hiring individuals with the needed skills is so difficult, improving the skill sets of the existing staff is a priority.
By making these changes and adopting a mindset of technological advancement, internal audit can take several steps forward on the technology front. According to the IIA, successful pursuit of innovation requires vision, time, effort, and a willingness to replace simple but suboptimal internal audit approaches with more sophisticated, effective methods. Internal audit functions that fail to modernize risk becoming irrelevant. 
SIDEBAR: Do Stakeholders Perceive Internal Audit as Adding Value?
When PwC put out its annual “State of Internal Audit” report last year, it shook the foundations of the internal audit profession with its controversial finding that a majority of company leaders didn’t think internal audit was adding significant value. That 2017 report caused some serious hand wringing and soul searching in internal audit circles.
This year’s findings, that internal audit needs to adopt more technology and innovate—presumably by engaging PwC to show the way—is an important message for internal audit, but unlikely to cause the same consternation as last year’s report. The idea that internal audit needs to do a better job embracing data analytics, artificial intelligence, and other technological advances is unlikely to be news to many internal audit leaders.
It’s worth noting that PwC did not update the jarring finding from last year that the percentage of stakeholders, including senior managers and board members that it surveyed, who said internal audit provided significant value had slipped from 54 percent in 2016 to 44 percent in 2017. By reading into the results it did offer on how stakeholders value the three different types of internal audit departments, (see article above) however, there might be some mildly good news for internal auditors.
Extrapolating from the data on the 97 percent of stakeholders who provided views on whether or not their internal audit departments provide “significant value” reveals an average of 49.4 percent who say it does, up significantly from last year’s 44 percent figure. But since the report didn’t focus here, it’s hard to consider what could be driving it. It certainly possible that last year’s 44 percent figure and 10 percent drop, was more of an anomaly that a real indicator that internal audit departments—considered broadly—are underperforming.
Joseph McCafferty is editor & publisher of Internal Audit 360°
Did you enjoy this article? Consider making a donation to support independent business journalism at Internal Audit 360°. Click Here!
This is also apparent in emerging markets particularly Asia amd the Middle East. Even professional firms providing IA and risk services are struggling to incorporate innovative technology which greatly affects value. Additionally, some ACs lack enthusiatic sponsorship to the adoption especially when IA’s performance is perceived to be poor (e.g. when IA is just introduced). This makes IA less exciting plus the fact that incumbents are sticking to the norm.
Technological advancement in IA is sophisticated and challenging as it can’t be done just like picking items off the shelves. Systems, infrastructure and culture are different from one organization to the other. Thus tailor-fitting is a necessity which can at times be costly. And, its relevance is a race with time as technology always evolve. What was adopted today may not be relevant tomorrow.
This makes me sad. IA is struggling as assurance does.
Thanks for your thoughtful and excellent comment. -Joe