As a part of PwC Switzerland’s Internal Audit Services team, I get to take a sneak peek into Internal Audit (IA) functions of numerous organizations. This offers an exciting opportunity to get an overview and feel of IA in a given market, as well as to see first-hand how integrating IA and technology increases the efficiency and effectiveness of IA functions, ultimately adding great value to organizations.
Through our State of Internal Audit Survey, we gathered insights, which lead us to believe that there is great potential in the advancement of IA functions in Switzerland, specifically through technology.
When asked to indicate their level of agreement with the following statement: “Internal audit's technology roadmap is aligned with the organization's technology roadmap”, 53% of respondents somewhat or strongly agreed. That means 47% of respondents did not believe that their organization aligns IA with their technology strategy.
Moreover, when asked how sophisticated the use of technology in various functions around the organization is. The Compliance and IA functions were perceived as having the least advanced level of technology.
Across Switzerland, and globally, companies are evaluating how technology can and will shape their organizations in the near and long-term future. Leading companies have IA functions who are bravely exploring how technology can enable their teams and transform the value they can deliver. But, it’s clear from the survey that not all companies are there yet. Where does your company stand?
Here are five signs that your organizations IA function needs an upgrade ASAP:
Out of 205 European respondents, 44% have identified a lack of budget for IT as the main factor preventing IA from improving in sophistication. If an IT budget for IA is not on your radar, then you can rest assured that an upgrade is long overdue.
Organizations need to start thinking about what technologies make sense for them, and set accordingly a yearly budget for it.
Time and time again organizations underestimate the power and importance of talent. 38% of European respondents have identified the lack of skill sets to leverage new technology as the second main shortcoming in the advancement of IA in their respective organizations.
Technology strategies need to be linked to talent strategies in order to be effective. Changes in technologies leveraged by an IA function will translate into a change of skillset requirements, as some skills become obsolete, and some need to be enhanced. When implementing a new technology, Management needs to design a way to close that gap. Talent acquisition, training and/or restructuring, should be considered and planned for when making any decisions related to IT.
Collaboration tools are increasing in adoption. From our 354 European respondents, 94% are currently using collaboration tools for document sharing and storing. However, the numbers start decreasing when it comes to virtual meeting tools (89%), work flow/dashboarding and reporting tools within IA (audit execution and issue tracking) (48%), and the use of collaboration and interaction tools with shared cross functionality (29%).
While collaboration tools offer the ability to respond in real time or more promptly with a bigger group of people, they are not all created equal. Depending on the size and structure of your organization, a virtual meeting tool may be of more value to you than a dashboarding and reporting tool.
Collaboration tools can also be restricted to internal use, or offer the possibility of collaborating beyond one’s organization. Accordingly, with 58% of European survey respondents indicating that they rely on co-sourcing from professional services firms, we could see a greater need going forward for external collaboration tools to further facilitate the sharing of information (e.g. in outsourcing portions of audits, augmenting staff).
Data can be great, if it’s the right data. Using wrong data and trying to derive meaningful insights from it will get you nowhere.
When it comes getting data, respondents have declared that today data comes predominantly directly from the business process owners or through direct financial or operational system access for self-service.
The biggest adoption over the next two years, according to respondents, will be occurring in the use of GRC technology tools. These tools can be great in extracting large data in a workable way, especially when defining audit universes and scopes. Examples include extracting whole general ledgers and organizing the data in such a way, so as to most efficiently and effectively pin-point problem areas and analyze populations, to get the most suitable scope for the assignment at hand.
Recently, we’ve been seeing more and more companies use Robotics to perform simple IA tasks, freeing up talent to focus on tasks requiring analysis and judgement. For large organizations, the speed, accuracy and cost improvement potential is definitely worth a thought. Though the benefits are numerous and the moment is big, the adoption is slow. Currently 4% of European respondents surveyed are part of organizations that leverage robotic process automation or natural language learning. However, over the upcoming 5 year’s, 38% of respondents have said they will be joining in.
Internal Audit in Switzerland is changing. 58% of respondents feel that in five years IA functions will move “beyond executing the audit plan to give prospective strategic advice on risk to the business.”
In order to achieve this shift, companies will need to focus on the value they’re adding to their businesses, and how to increase that by offering meaningful insights to process owners.
Aligning your IA and tech strategies is the way to start bringing your IA function into the future and to more effectively serve your organization. Each organization is different, and will accordingly derive different values from different tools.