The Added Value of Integrating Internal Audit into Strategic Conversations

Our governance, risk and compliance team recently surveyed internal auditors and members of executive management on the strategic role of internal audit. In our report, 95% of management agreed that internal audit should participate in meetings with executive leadership on strategic decisions. However, only 80% agreed that internal audit currently plays this role, highlighting an opportunity for internal auditors. Below, we explore how to get started:

Internal Audit as a Strategic Partner

Having internal audit participate in meetings with executive leadership on strategic decisions offers several benefits to organizations. It fosters a culture of transparency and accountability, so that potential risks are identified early and addressed proactively. It also contributes to better decision-making, as strategic choices are made with a comprehensive understanding of their impact on risk management and organizational objectives. Internal audit’s involvement provides an independent perspective, which can be crucial in highlighting potential blind spots that might be overlooked by other leaders. Additionally, internal audit can offer valuable insights into the effectiveness of internal controls and operational efficiency, helping to align strategic initiatives with best practices in governance and compliance.

For optimal results, including internal audit in the initial stages of ideation allows for the identification of risks as plans are developed and helps streamline the implementation of proper controls.

The Push for Formalization

In the same report, it was revealed that 90% of management (independent of internal audit) agreed there is a shared vision of internal audit’s role and mission among the audit committee, board of directors, executive management, and the internal audit department. Achieving this requires buy-in from management, the board, and internal audit on the department’s mission and vision.

Using the vision and mission statements, create formal policies and procedures for involving the internal audit department in strategic initiatives, outlining how and when they should be engaged. It’s also important to articulate how internal audit can add value to strategic initiatives by providing insights on risk management and process improvements. Be sure to regularly communicate the benefits of internal audit’s involvement to senior management and stakeholders, highlighting past successes and examples of collaboration.

Our findings highlight the need to standardize the involvement of internal audit in strategic meetings. Despite an elevated level of agreement on the importance of its role, ensuring consistent and structured participation can bridge the gap between perception and practice.

Earning a Seat at the Table

To position internal audit as a strategic partner within the organization, it can demonstrate the department’s value through proactive risk management and aligning audit objectives to business goals. Whether internal audit is completing SOX or compliance testing, there is always the potential to add value beyond the traditional audit approach. For example, internal audit can learn the regulatory landscape and work with management to prepare for changes or focus on integrating automation tools to streamline repetitive tasks. Additionally, providing recommendations for process improvements can lead to cost savings without increasing perceived risk. Regardless of the projects and findings, it is key to offer practical recommendations that address risk and support the achievement of strategic goals.

Aligning Audit Resources

On a larger scale, considering the strategic goals of the organization in completing the risk assessment and audit plan enhances the relevance and impact of the department’s work. By focusing on areas that directly affect strategic goals, internal audit can more effectively identify and address risks that could impede the achievement of these objectives.

Investing in the Department

Investing in department training and professional development allows internal auditors to enhance their skills in identifying and leveraging value-added opportunities beyond traditional compliance and control functions.

Collaborating Across the Organization

Additionally, encourage the internal audit department to build relationships across the organization. This allows them to gain deeper insights into operational challenges and strategic priorities, enabling them to find opportunities to add value.

Internal Audit in Decision-making

As proven above, including internal audit in strategic decisions can strengthen organizational governance.   If your organization or internal audit department needs assistance in enhancing internal audit as a strategic partner without affecting the independence of the department, the team at Sikich can support your organization in this. Please contact us to get started.

Check out our report on “The Strategic Role of Internal Audit” for other noteworthy findings.