In the last decade, there has been a growing number of legislative and self-regulatory interventions, like the need of turning to audit consulting services, which are aimed at improving the operation of corporate controls to strengthen the guaranteed mechanisms to protect investors. On the other hand, the expectation of stakeholders that the governance and processes of the bodies responsible for control adhere to recognized standards and leading reference practices is growing.
The need to significantly evolve the Internal Audit capacity to represent and communicate to stakeholders the centrality of its role and the value produced by the risk management and internal control system should not be underestimated. This communication, going beyond a mere fulfilment of the regulatory disclosure requirements, should be interpreted as a distinctive and qualifying element of one’s mandate.
An excellent Internal Audit: what is it for?
Internal Audit functions add value to organizations; however, market observers show that stakeholders (and primarily the board of directors and top management) expect more.
The answer to this call is proving difficult, considering how much and how organizations have changed in the last decade: business structures are becoming more and more complex, big data is more disruptive than ever, fraudulent activity is on the rise, customers, investors, and regulators analyse companies more precisely. And for regulated companies, the speed of change will only increase.
Analysing the expectations of stakeholders, 8 macro-attributes are identified to identify excellent Internal Auditing.
The consulted best audit firm in India should promote the quality and innovation through standards clearly defined, fostering a culture that rewards innovation and continuous improvement, as well as ensuring quality and alignment of the audit plan with the risk profile and the organization changes (Quality & Innovation).
Internal Audit should be multifunctional, maintaining in any case its autonomy and clear lines of reporting. In this regard, the audit plan should be aimed at promptly anticipating needs and changes in the reference context (Service Culture).
Internal Audit should effectively exploit the technology in all areas of operation. Data analytics should be focused on risk profiles and business understanding. The tools used should be geared towards improving the understanding and assessment of risks and helping to identify any anomalies.
To make an effective contribution, the team of Internal Audit must adequately understand the architectural complexity of enterprise systems and to innovate using technology, to implement control and efficient verification (Technology).
The Internal Audit should optimize costs through the adoption of an effective methodology for audit, based on standardized and streamlined processes to maximize efficiency while optimizing costs (cost optimization).
The auditing services in India should ensure alignment to business through proper strategic planning of its activities and coordination with the other “lines of defence”, appropriately considering the expectations of stakeholders in its mission and defining the value it can offer to an organization (business alignment).
These aspects force us to rethink how Internal Audit activities are carried out, especially considering the changing context in which they are carried out.
It is important to adapt faster, not simply to keep up with the pace of change, but to accelerate it. In this regard, a revolution is necessary, rather than an evolution, which combines talent, technology, and innovation.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
Posted by:
CA Aman Aggarwal
AKGVG & Associates