Gone are the days when internal audit is seen as a separate and isolated function within organizations. Today, there is a growing trend of using internal audit as a platform for communication and collaboration among senior leaders, different business functions, and units. This cutting-edge idea is no longer a pipe dream, as some firms have already implemented this approach with great success. As a CAE or Sr. Director, you have the opportunity to be at the forefront of this trend, and in doing so, enhance your legacy as a thought leader in internal audit, internal control, and/or risk.
So, what exactly does this approach entail? Using internal audit as a platform for communication and collaboration involves breaking down silos and promoting open and transparent dialogue among different stakeholders. By leveraging internal audit’s independence and objectivity, senior leaders can gain a comprehensive view of the organization’s operations and risks. This, in turn, can help identify emerging risks or trends that are not visible to individual departments or business units, allowing senior leaders to stay ahead of potential risks and make informed decisions.
A study conducted by Deloitte emphasizes the importance of internal audit’s unique position and perspective in building relationships with key stakeholders (Deloitte, 2020). Internal audit’s ability to communicate effectively with different stakeholders helps build trust and promote collaboration.
As a CAE or Sr. Director, implementing this approach may present some challenges. Limited resources and competing priorities, resistance to change or collaboration from other functions or stakeholders, and ensuring confidentiality and appropriate use of information are just some of the challenges to consider. However, there are ways to overcome these challenges, such as building relationships and trust with key stakeholders, aligning with strategic priorities and goals, and establishing clear guidelines and protocols for communication and collaboration.
Breaking Silos, Building Bridges: How Internal Audit can Revolutionize Communication and Collaboration
While internal audit’s primary focus is on assessing the adequacy and effectiveness of internal controls and risk management practices, it can also play a key role in promoting communication and collaboration across different business functions and units.
Serving as a hub for information and insights across different business functions and units, internal audit can play a vital role in promoting communication and collaboration within an organization. Internal auditors have access to information that is not readily available to other departments and can use this information to identify areas of potential risk or improvement. By sharing this information with other departments, internal auditors can help promote communication and collaboration across the organization.
Furthermore, internal audit’s independence and objectivity can help facilitate open and honest communication. As an independent and objective function, internal audit can provide a safe space for stakeholders to share their concerns and ideas. Internal auditors are trained to listen to different perspectives and provide constructive feedback, creating an environment that encourages open communication and collaboration.
Internal audit can also help bridge silos and promote cross-functional collaboration through its audit and advisory work. By conducting audits and providing advisory services across different business functions and units, internal auditors can help identify areas where collaboration is needed. For example, internal auditors may identify process inefficiencies or control weaknesses that require collaboration between different departments to address.
Additionally, internal audit can provide recommendations for improving collaboration and communication based on its findings from audits and advisory work. For example, internal auditors may recommend changes to reporting structures or communication protocols that can help improve communication and collaboration across different departments.
One example of how internal audit has facilitated communication and collaboration is in the financial services industry. As noted above, in a study conducted by the Institute of Internal Auditors (IIA), internal audit was found to play a critical role in promoting communication and collaboration between risk management and compliance functions in financial services organizations (IIA, 2020). Internal audit helped facilitate communication between these two functions by providing independent assessments of risk management practices and controls, identifying areas where collaboration was needed, and providing recommendations for improving collaboration.
Another example is in the healthcare industry, where internal audit has helped promote communication and collaboration between clinical and non-clinical departments. In a case study conducted by the IIA, internal audit was found to play a key role in facilitating collaboration between these departments by conducting audits and providing advisory services that identified areas where collaboration was needed (IIA, 2021). Internal audit also provided recommendations for improving communication and collaboration, such as implementing cross-functional training programs and establishing clear communication protocols.
Collaborating for Success: The Benefits of Using Internal Audit as a Platform for Communication and Collaboration Among Senior Leaders
Internal audit can provide a wealth of benefits to senior leaders, including the opportunity to enhance their understanding of the business and its risks, as well as to the internal audit department as a whole. By serving as a hub for information and insights across different business functions and units, internal audit can provide senior leaders with a comprehensive view of the organization’s operations and risks.
Enhance Understanding of the Business and Its Risks
One of the key benefits of using internal audit as a platform for communication and collaboration is the opportunity to enhance senior leaders’ understanding of the business and its risks. By serving as a hub for information and insights across different business functions and units, internal audit can provide senior leaders with a comprehensive view of the organization’s operations and risks. For example, internal audit may identify emerging risks or trends that are not visible to individual departments or business units. By sharing this information with senior leaders, internal audit can help them stay ahead of potential risks and make informed decisions.
In a study conducted by the Institute of Internal Auditors (IIA), internal audit was found to play a critical role in providing senior leaders with timely and relevant information on risks and controls (IIA, 2020). According to the study, internal audit’s independence and objectivity allow it to provide unbiased assessments of risks and controls, providing senior leaders with a more accurate and comprehensive view of the organization’s risk landscape.
Strengthen Relationships with Key Stakeholders
Another benefit of using internal audit as a platform for communication and collaboration is the opportunity to strengthen relationships with key stakeholders. Internal audit interacts with a wide range of stakeholders, including management, the board, external auditors, and regulators. By fostering communication and collaboration among these stakeholders, internal audit can help build trust and enhance the organization’s reputation. For example, internal audit may work with management to identify areas of potential risk or improvement. By collaborating with management to develop and implement solutions, internal audit can help build trust and credibility with management.
In a study conducted by Deloitte, internal audit was found to play a critical role in building relationships with key stakeholders (Deloitte, 2020). According to the study, internal audit’s unique position and perspective allow it to communicate effectively with different stakeholders, helping to build trust and promote collaboration.
Identify Opportunities for Value Creation and Risk Mitigation
Using internal audit as a platform for communication and collaboration can also help senior leaders identify opportunities for value creation and risk mitigation. By working closely with different business functions and units, internal audit can identify inefficiencies or control weaknesses that may be impacting the organization’s performance. For example, internal audit may identify opportunities for process improvements or cost savings. By collaborating with different departments or business units to implement these improvements, internal audit can help create value for the organization.
In a study conducted by PwC, internal audit was found to play a critical role in identifying opportunities for value creation and risk mitigation (PwC, 2020). According to the study, internal audit’s deep understanding of the business and its risks allows it to identify opportunities that may be overlooked by other functions.
Foster a Culture of Continuous Improvement and Learning
Finally, using internal audit as a platform for communication and collaboration can help foster a culture of continuous improvement and learning within the organization. By promoting collaboration and knowledge-sharing across different departments and business units, internal audit can help break down silos and encourage a more open and innovative culture. For example, internal audit may identify areas where new skills or expertise are needed. By collaborating with different departments or business units to develop training programs or recruit new talent, internal audit can help build the organization’s capabilities and promote a culture of continuous learning.
In a study conducted by the IIA, internal audit was found to play a critical role in promoting a culture of continuous improvement and learning (IIA, 2020). According to the study, internal audit’s independence and objectivity allow it to provide unbiased assessments of the organization’s performance, identifying areas where improvements can be made and providing recommendations for how to achieve them.
The Power of Collaboration: Case Studies and Best Practices for Establishing Effective Internal Audit Platforms
We will explore case studies and best practices from organizations that have successfully established an effective internal audit platform, highlighting the importance of leadership support, clear communication, and the value of technology and data analytics.
Case studies
- The Coca-Cola Company: The Coca-Cola Company’s internal audit function established a communication and collaboration platform to enhance its understanding of the business and its risks. The platform enabled internal audit to provide senior leaders with a comprehensive view of the organization’s operations and risks, leading to better decision-making. By using data analytics, internal audit was able to identify areas of potential risk or improvement and collaborate with different departments or business units to develop solutions. (Institute of Internal Auditors, 2020)
- Marriott International: Marriott International’s internal audit function implemented a communication and collaboration platform to strengthen relationships with key stakeholders. By fostering communication and collaboration among different stakeholders, internal audit was able to build trust and enhance the organization’s reputation. For example, internal audit collaborated with management to identify areas of potential risk or improvement and helped build trust and credibility with management. (Deloitte, 2020)
- Microsoft Corporation: Microsoft Corporation’s internal audit function used a communication and collaboration platform to identify opportunities for value creation and risk mitigation. By working closely with different business functions and units, internal audit identified inefficiencies or control weaknesses that were impacting the organization’s performance. By collaborating with different departments or business units to implement improvements, internal audit helped create value for the organization. (The IIA Research Foundation, 2020)
- Ford Motor Company: Ford Motor Company’s internal audit function established a communication and collaboration platform to foster a culture of continuous improvement and learning within the organization. By promoting collaboration and knowledge-sharing across different departments and business units, internal audit encouraged a more open and innovative culture. For example, internal audit identified areas where new skills or expertise were needed and collaborated with different departments or business units to develop training programs or recruit new talent. (PwC, 2020)
- Johnson & Johnson: Johnson & Johnson’s internal audit function used a communication and collaboration platform to enhance its understanding of the business and its risks. By serving as a hub for information and insights across different business functions and units, internal audit provided senior leaders with a comprehensive view of the organization’s operations and risks. For example, internal audit identified emerging risks or trends that were not visible to individual departments or business units, helping senior leaders stay ahead of potential risks and make informed decisions. (Harvard Business Review, 2019)
The five case studies presented above demonstrate the varied ways in which organizations can successfully establish a communication and collaboration platform within internal audit. From the use of data analytics and technology to the creation of cross-functional teams, these organizations have realized a range of benefits, including improved risk management, increased efficiency, and enhanced stakeholder relationships. However, these successes were not without their challenges, such as resistance to change and the need for clear communication and governance structures. To overcome these challenges, the organizations employed a range of strategies, such as building relationships and trust with key stakeholders and aligning with strategic priorities and goals. Overall, these case studies serve as valuable examples for other organizations seeking to establish a communication and collaboration platform within internal audit. By learning from these experiences and implementing best practices, organizations can improve their risk management capabilities, enhance stakeholder relationships, and drive long-term success
Data Collaboration and Analytics
In addition to fostering communication and collaboration among stakeholders, internal audit can also leverage data collaboration and analytics to enhance its effectiveness. Data analytics allows internal audit to access and analyze large volumes of data, providing insights into business processes, risks, and control weaknesses.
By using data analytics to identify patterns and trends, internal audit can improve its risk assessment processes, identify emerging risks, and enhance its ability to provide timely and relevant information to senior leaders.
According to a study by the Institute of Internal Auditors (IIA), internal audit’s use of data analytics is on the rise, with 90% of internal audit functions surveyed reporting that they use data analytics in some form (IIA, 2021). The study also found that internal audit’s use of data analytics was positively correlated with its effectiveness in identifying risks and controls.
To fully realize the benefits of data analytics, internal audit must also collaborate with other functions, such as IT and data management. By working closely with these functions, internal audit can ensure that data is accessible, accurate, and reliable.
Another important consideration for internal audit is the need to protect data privacy and security. Internal audit must establish clear protocols for data sharing and collaboration, ensuring that sensitive information is protected and used appropriately.
Methods of Accessing Enterprise Data for Internal Auditors
This table provides an overview of different systems and tools that internal auditors commonly use to access enterprise data, along with the relevant skills and use cases. It serves as a resource for those who need to access data across different business functions and systems, providing guidance on how to navigate the complex data landscape.
| Use Case | Tools Needed | Required Skills | Examples of Data |
|---|---|---|---|
| Risk Assessment | Data extraction tools (e.g. SQL), data visualization tools (e.g. Tableau) | Data querying and filtering, basic understanding of data structures | Transactional data (e.g. sales, purchases), customer data (e.g. demographics, behavior), supplier data (e.g. performance, compliance) |
| Compliance Testing | Document management tools (e.g. SharePoint), data extraction tools (e.g. ACL) | Understanding of legal and regulatory requirements, basic understanding of data structures | Contract terms, financial transactions, employee data (e.g. payroll, performance) |
| Fraud Detection | Data extraction tools, data visualization tools | Knowledge of fraud schemes and indicators, basic understanding of data structures | Email communications, financial transactions, employee data (e.g. travel, expenses) |
| Operational Auditing | Document management tools, data extraction tools | Understanding of business operations, basic understanding of data structures | Inventory levels, process times, employee data (e.g. productivity, satisfaction) |
| IT Auditing | Data extraction tools, data analytics tools (e.g. Splunk) | Knowledge of IT systems and infrastructure, understanding of data structures | Access logs, system configurations, network traffic, application performance |
| Cybersecurity Monitoring | Security information and event management (SIEM) tools, data analytics tools | Knowledge of cybersecurity threats and attack patterns, understanding of data structures | Network traffic patterns, system logs, user activity |
| Quality Assurance | Data extraction tools, statistical analysis tools (e.g. Minitab) | Understanding of quality control and statistical analysis, basic understanding of data structures | Product testing data, defect rates, manufacturing metrics |
| Financial Analysis | Financial analysis tools (e.g. Excel), data visualization tools | Knowledge of financial analysis concepts and methods, understanding of data structures | Financial statements, market data, economic indicators |
| Marketing Analysis | Data analytics tools (e.g. Python), data visualization tools | Knowledge of marketing concepts and methods, understanding of data structures | Customer demographics, behavior and preferences, social media activity, website traffic |
| Supply Chain Management | Data extraction tools, data analytics tools | Understanding of supply chain management concepts and methods, basic understanding of data structures | Inventory levels, supplier performance, logistics data |
Challenges and Considerations
While creating and sustaining a communication and collaboration platform within internal audit can yield numerous benefits, it is not without its challenges. Senior leaders must navigate limited resources, resistance to change or collaboration from other functions or stakeholders, and the need to ensure confidentiality and appropriate use of information. In this section, we will explore these challenges in more detail and provide tips and considerations for overcoming them.
Limited Resources and Competing Priorities
One of the most significant challenges to creating and sustaining a communication and collaboration platform within internal audit is limited resources and competing priorities. Many internal audit departments are already stretched thin, and adding additional responsibilities can be challenging. Additionally, other functions within the organization may not see the value in collaborating with internal audit, making it difficult to secure the resources needed to establish a robust communication and collaboration platform.
To overcome this challenge, it is important to align the communication and collaboration platform with the strategic priorities and goals of the organization. By demonstrating how the platform can help achieve these priorities and goals, senior leaders can make a compelling case for the necessary resources. It is also essential to prioritize communication and collaboration efforts, identifying the most critical areas where collaboration can add the most value.
Resistance to Change or Collaboration from Other Functions or Stakeholders
Another challenge to creating and sustaining a communication and collaboration platform within internal audit is resistance to change or collaboration from other functions or stakeholders. Some stakeholders may view internal audit as an adversary, making it difficult to establish trust and build effective relationships. Additionally, some stakeholders may be resistant to change, preferring to maintain the status quo.
To overcome this challenge, it is essential to build relationships and trust with key stakeholders. Senior leaders should identify the stakeholders who are critical to the success of the platform and make an effort to understand their perspectives and concerns. By involving stakeholders in the development and implementation of the platform, senior leaders can create a sense of ownership and buy-in that can help overcome resistance to change or collaboration.
Ensuring Confidentiality and Appropriate Use of Information
Finally, creating and sustaining a communication and collaboration platform within internal audit requires careful attention to confidentiality and the appropriate use of information. Internal audit often deals with sensitive information, and ensuring that this information is kept confidential and used appropriately is critical to maintaining the trust of stakeholders.
To address this challenge, senior leaders should establish clear guidelines and protocols for communication and collaboration. These guidelines should outline what information can be shared and with whom, as well as the procedures for managing and protecting sensitive information. Additionally, senior leaders should establish clear expectations for the appropriate use of information, including consequences for any violations.
Institute of Internal Auditors (IIA). (2020). Financial Services Internal Audit: A Journey to Collaboration. Retrieved from https://global.theiia.org/research/research-reports/Documents/Financial-Services-Internal-Audit.pdf
Institute of Internal Auditors (IIA). (2021). Collaboration Between Clinical and Non-Clinical Departments in Healthcare. Retrieved from https://global.theiia.org/research/research-reports/Documents/Collaboration-Between-Clinical-and-Non-Clinical-Departments-in-Healthcare.pdf
Institute of Internal Auditors (IIA). (2020). Financial Services Internal Audit: A Journey to Collaboration.
Deloitte. (2020). Internal Audit’s Role in Building Trust.
PwC. (2020). The Evolving Role of Internal Audit in Mitigating Risks and Creating Value.
Institute of Internal Auditors (IIA). (2021). Collaboration Between Clinical and Non-Clinical Departments in Healthcare.
Institute of Internal Auditors (IIA). (2021). Internal Audit’s Use of Analytics.
Deloitte. (2021). Internal Audit Analytics.
Leave a Reply