Internal audit should become strategic risk advisers to the board, asserts new study from PricewaterhouseCoopers

PricewaterhouseCoopers' Global State of the Internal Audit Profession Survey polled more than 2,000 executives from 55 countries and also concluded that, to remain relevant and meet stakeholder demands, internal audit must evolve to an enhanced 'Internal Audit 2.0' state that provides business leaders with actionable business risk intelligence.

Dinu Bumbacea, PwC Advisory Lead Partner for Romania, said:

'The financial crisis has caused a heightened scrutiny of companies' risk management practices. As many have blamed the crisis on poor risk management, CEOs across all industries are looking to upgrade their enterprise-wide risk management capability to better prepare for success in what is likely to be a very challenging business environment.'

'Needs and expectations for internal audit have never been higher, so the key question is whether internal audit is delivering. There is also a challenge in building consensus for an expanded and more strategic role for internal audit.'

The study identifies three critical focus areas for internal audit departments:

Critical risks and issuesAligning internal audit's value position with its stakeholders' expectationsMatching the staffing model with that value proposition.

However, these are also the three areas where internal audit leaders believe they have the most room to improve.

Dinu Bumbacea added:

'What senior executives should take away from this survey is that, for an internal audit team to assume the role of strategic partner, members must employ highly experienced and skilled professionals who can pinpoint trouble spots, synthesise a lot of data, better utilise technology and help the organisation be more successful in a very challenging business environment.'

With these new challenges in mind, PwC believes internal audit must take a more radical approach to change than it has in the past, and rethink and redefine the way it works. The survey outlines several important steps that should be taken:

• Start with a planRethink risk assessment practices
• Fill the skills and capabilities gapAlign with other assurance functions
• Focus on obtaining return on investment (ROI) from technology.

Dinu Bumbacea concluded:

'In this year's survey, we introduced the concept of 'Internal Audit 2.0' to start organisations thinking about dramatic change. As internal audit confronts new and continually changing needs and expectations, it must take the initiative to redefine its role. That means expanding its skill sets and preparing to take a leadership role as a more powerful resource for senior executives, directors and boards in aligning strategy and risk identification, control and mitigation.'

To download a full copy of the report, 'Internal audit professionals face a future rich in opportunity: PricewaterhouseCoopers 2010 State of the Internal Audit Profession study,' please visit: http://www.pwc.com/us/en/internal-audit/publications/2010-study-internal-audit-profession.jhtml.

Methodology

The 2010 Global State of the Internal Audit Profession survey for internal auditing was conducted in the fourth quarter of 2009 and includes responses from over 2,000 participants from more than 50 countries.

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PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

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