Internal Auditors Have Received Two Failing Marks!

The results of two recent surveys conducted by PwC (2017 State of the Internal Audit Profession Study) and Protiviti( 2017 Internal Audit Capabilities and Needs Survey) were disappointing, to say the least. I know some of you may find the title of this article a little offensive, but keep in mind that we can’t overcome our weaknesses and move forward if we don’t address them honestly and go through a thorough performance self-assessment!

Let’s start with the PwC report. It starts with a depressing statement :

“Despite strong ambition from CAEs to grow their value to the organization, PwC’s 2017 State of the Internal Audit Profession study shows Internal Audit is losing ground in trying to keep pace with stakeholder expectations. In the five years, we’ve been tracking this sentiment, 2017 represented the lowest stakeholder perception of Internal Audit value.”

The survey shows that  only 44% of the surveyed stockholders reported that internal audit contributes significant value! To understand how bad this is, just compare it to the 2016 survey results of 54%!The study suggests that ,among other things, ongoing compliance burdens and pressure to do more with less have contributed to the decline in the perceived internal audit value. The study also shows that only 9% of the surveyed respondents consider internal audit as a trusted advisor! PwC recipe for an agile internal audit is to be prepared & adaptive.

The Protiviti survey which deals with “Data Analytics", shows that while Data analytics is gaining a foothold in internal auditing, most internal audit shops are still in their “analytics infancy”.! To put things into perspective ,Protiviti survey shows that 90% of the respondents rated their data analytics maturity between (initial – defined),while the remaining 10% rated it between (managed – optimized)!The picture is not brighter when it comes to continuous auditing!The survey reveals that:

“The use of continuous auditing remains surprisingly low, only 37% of all internal audit functions that utilize data analytics employ continuous auditing.”

I hope that these two surveys serve as another wake-up call to internal auditors. As I said in one in my tweets:

“The greatest risk to internal audit remains the traditional, unpragmatic  & uncreative mindset of internal auditors!”

There is no substitute to courageous, committed  and visionary internal audit leaders to reverse the results of the surveys and “make internal audit great again”!!

These are my thoughts, please share yours!