Internal Audit is evolving.
As Internal Audit teams implement automation and data analytics to improve efficiency and increase audit coverage, it necessitates a maturation of skill sets, a cultural shift in mindset, and an organizational awareness of emerging risk.
So where do internal auditors begin? How and where do analytics and automation solutions need to be deployed for effective audit quality without diverging too far from existing audit missions or alienating key staff?
Mindset Shift: Putting the Internal Audit Process Under a Microscope
The first step to take in the journey toward future-proofing the Internal Audit organization and its activities is being open to change.
The old methods for audit (e.g., manual processes and dispersed information technology resources) may not always be the most efficient to execute an audit plan in today’s or tomorrow’s audit environment – especially given new human capital and ESG demands.
Due to the plethora of tools available to optimize the Internal Audit process, it’s clear that internal audit activities are ripe for new efficiencies – but it starts with the right calculation and direction from Internal Audit leaders.
Investing time and resources into automation and analytics specifically must originate from a mindset shift, which can take many forms, such as:
- Willingness to Update Existing Procedures – Technology continues to evolve at a rapid pace, benefitting many organizations and their processes. But audit procedures have largely been unchanged. Audit teams must be open to re-evaluating their current methods and figure out ways to utilize these same technologies to improve efficiency. This same openness also applies to leveraging successful practices, methodologies, and technologies from cybersecurity teams, as Internal Audit and Cyber functions converge efforts and goals.
- Champion and Support Innovation – Foster an environment of innovation within your audit team that encourages the development of automation or analytics expertise and any attempts to incorporate the technology into audits. Learn from mistakes and promote success stories to continue building innovative practices.
- Identify Potential Use Cases – Gather the audit team together to discuss pain points in the audit process. What tasks are necessary and time-consuming? What tasks are manual, simple, and highly repetitive? Tasks that meet these criteria should be considered for improvements using automation. For a data analytics lens, consider if a set of risk factors can be applied and analyzed within audit populations to identify anomalies or trends which can be used to isolate the highest risk samples that should be reviewed closely.
After that first leap of faith, leaders can deputize key staff to break ground on new process automation initiatives, risk management technologies, and data analytics software that’s critical to higher-value, higher-efficiency audits.
Developing Automation and Data Analytics Skills
To begin implementing automation and data analytics into audits, stakeholders within the Internal Audit department must develop the necessary skills and knowledge base to successfully use these emerging technologies.
Depending on your organization’s current structure and budget you may consider one or all of the below methods.
- Consolidate Training Resources – Identify the best automation and data analytics tools and training courses, then consolidate them into a centralized hub. This makes it easy for interested parties to increase their automation and data analytics abilities. Many people are interested in these technologies but don’t know how or where to get started. In fact, utilizing more advanced analytics applications is one of the top-cited challenges facing Internal Audit teams in 2022, with “ineffective investments in data analytics” not far behind.
- Incentivize Training and Certifications – Learning how to create automations and utilize data analytics are important skillsets for any audit team members to adapt to future change and to advance their careers. It can also be impactful for an organization to provide incentives for completing trainings and certifications for automation and data analytics tools.
- Develop an Automation and Data Analytics Group – Certain team members will be more adept and display more enthusiasm when learning automation and data analytics. Bring these folks together to assemble a group of automation and data analytics subject matter experts (SMEs). This group can use their expertise to create automations or incorporate data analytics quicker for audit processes or to train additional team members faster with their existing knowledge. Cross-training your internal auditors or leveraging SMEs from across your business to support your audit team will strongly increase optimization opportunities for your group.
As the use cases for analytics and automation become evident to the larger audit team, excitement and talent development will compound over time, fueling new avenues and opportunities for audit automation and analytics.
Optimizing Automation and Data Analytics for Utilization and Configuration
To fully unlock the benefits of automation and data analytics, it is critical to look beyond the one-off use cases and focus on tasks that are performed on a recurring basis or tasks that are commonly performed on multiple audits.
Next-step opportunities for optimization include:
- Standardized Templates – Standardization in audit documentation makes it easier to automate and easier to scale to different audits, as the format, inputs, and outputs will be consistent. Examples could include Risk-Control Matrix, Population-Sampling Documentation, and Testing Lead Sheets.
- Methodologies for Implementing Automation and Data Analytics – Create a formalized approach for how to develop automations and how to incorporate data analytics. A formal plan makes the steps involved clear and eases the burden of using automation and analytics. Lessons learned from early efforts can be integrated into these methodologies to avoid wasting time on the same pitfalls.
- Build Use Case Library – This library would include pre-made automations for common audit tasks that do not differ much from audit-to-audit and data analytics setups for common audit populations. With only slight configuration changes, these pre-made automations and data analytics setups could be utilized for multiple audits and extend the initial benefits.
Your team can drive greater efficiencies, stronger post-audit recommendations, and enhanced upskilling by successfully incorporating automation and data analytics technologies into your audits.
To mobilize technology-enabled solutions in your Internal Audit function, contact CrossCountry Consulting today.