Building a Better Auditor: Internal Audit Transformation

Within this transformed landscape, internal auditors must expand their experience and knowledge to include areas such as cybersecurity; environmental, social, and governance (ESG) compliance; data governance; third-party risk; and strategic alignment. This evolution requires a redefinition of the internal audit mandate — from checking controls to influencing decisions and enabling changes.

Strategy Alignment

Increasingly, stakeholders expect internal auditors to not only identify risks but also provide strategic insights. This transformation requires internal audit to align its activities with the organization’s strategic priorities. By integrating with enterprise risk management frameworks, internal audit can ensure that its assessments and recommendations directly support the organization’s objectives and initiatives. This alignment helps internal audit teams prioritize high-impact areas.

Internal audit’s collaboration with other departments is also critical to achieving strategic alignment. Working cross-functionally with departments like finance, operations, human resources, and IT enhances the value of audits by introducing diverse perspectives, breaking down silos, and driving process improvements. For example, collaboration with ESG teams can ensure sustainability efforts are measurable, verifiable, and transparent.

Furthermore, internal audit’s insights can influence strategic decisions by highlighting risks and opportunities related to innovation, regulatory changes, and market disruptions. By communicating findings in a timely and actionable manner, audit leaders can position themselves as trusted advisors to executive management and the board.

Transformation Challenges

Despite the opportunities, several challenges remain. One of the most significant is resistance to change — both within internal audit teams and the wider organization. Resistance to evolving practices can arise within audit teams and the broader organization. Internal auditors accustomed to traditional approaches may be reluctant to adopt new tools, while business units may question audit’s role in strategy and transformation.

Leaders must prioritize change management and communication to promote a forward-looking mindset. Training, engagement, and leadership support are vital to overcoming resistance and building a culture of innovation.

Maintaining independence and objectivity is also a priority as internal audit expands into advisory and strategic roles. Its independence and objectivity may come into question — especially if internal auditors become too involved in operational decision-making. To solve this, clear boundaries must be established in the audit charter and operating procedures. Transparent reporting lines and oversight mechanisms are crucial to preserving the trust placed in internal audit.

Another challenge is the scarcity of the right talent. Modern internal auditing requires a blend of skills — including analytical, digital, and interpersonal capabilities — that are increasingly difficult to find in the market. Many internal audit teams lack sufficient expertise in areas like data analytics, IT risk, and sustainability.

Organizations should establish targeted development plans, invest in upskilling, and consider partnerships or co-sourcing for specialized audits. A focus on learning and career progression helps attract and retain top talent.

Yet another challenge is in keeping pace with emerging risks. The external risk environment continues to evolve rapidly. Issues like supply chain disruptions, environmental risks, and cyber threats require continuous monitoring and quick adaptation.

Internal audit functions must adopt agile approaches and routinely update risk assessments to ensure relevance. Flexibility in planning and execution enables auditors to focus on the most pressing concerns. While embracing new tools and methodologies enhances efficiency, it can also introduce new risks. Poorly implemented technology may compromise audit quality, objectivity, or ethical standards.

Any innovations must be governed by well-documented processes, robust validation, and clear accountability. Internal audit must ensure new tools align with legal and ethical obligations while maintaining credibility.

Overall, internal audit’s transformation is not a destination but an ongoing journey. As organizations face new and unpredictable challenges, internal audit must remain resilient, agile, and forward-thinking.