Majority of Internal Audit Leaders Have Room for Improvement in Next-Generation Auditing Adoption and Skills, According to Protiviti Survey

According to the findings from Protiviti 2020 Internal Audit Capabilities and Needs Survey, chief audit executives (CAEs) and internal audit leaders report their next-generation competency levels in three vital areas – governance, methodology and enabling technology – to be remarkably low. The survey also identified that the majority of internal audit functions are at risk of losing relevance for not modernizing and transforming the audit process, against the increasing demands of today’s stakeholders.

The Protiviti study, titled “Exploring the Next-Generation of Internal Auditing,” surveyed nearly 780 Chief Audit Executives (CAEs) and internal audit leaders across industries to uncover the pressing priorities for internal audit functions when it comes to next-generation auditing skills. The study was completed in the first quarter of 2020 and was based on a survey conducted in the fourth quarter of 2019, before the onset of the COVID-19 pandemic. The release of the study was deferred to now as businesses worldwide reacted and adjusted to the new environment.

Read More: GlobalFintechSeries Interview with Curtis Webb, Vice President, Product Management – Emerging Payments at Meta Financial Group and MetaBank

“We continue to advocate for the embrace of a next-generation internal audit mindset and the adoption of the governance, methodology and enabling technology competencies that will position internal audit functions to best support their organizations as they strive to transform amid this pandemic and in the years to come,” said Brian Christensen, executive vice president, global internal audit, Protiviti.

In what should be a red flag for chief audit executives and audit committees, enabling technology received some of the lowest competency-level self-assessments in the entire survey: (rated on a 1 to 5 scale with 5 being highest)

One telling example of the need for internal audit leaders to step up their innovation and transformation initiatives is that only 10 percent of those surveyed are undertaking process mining – a form of analytics that uses transactional data captured by enterprise systems to analyze and visualize how processes are actually being performed – in their internal audit function, and a surprising 41 percent of respondents reported they have no plans to adopt this enabling technology at all. Notably, internal audit’s exploration and adoption of enabling technology also lags that of other key business functions such as finance.

Additionally, the overall number of internal audit organizations reported to be undertaking digital transformation initiatives more broadly declined since the 2019 survey to 60 percent (down from 76 percent in 2019).

“Our survey confirms the awareness among internal audit professionals of how far behind their function is in terms of the core competencies required to provide value in the digital age,” added Christensen. “Next-generation auditing capabilities, processes and tools – from strategic vision, agile auditing and dynamic risk assessment to RPA, machine learning and advanced analytics, among others – should be priorities for the internal audit function to build and grow as their companies continue to transform and stakeholder expectations for these capabilities rise. Our results show that audit committees certainly hold this to be true.”

Read More: Huobi Introduces Request for Quote for Electronic Trading and Voice Trading