Internal audit departments often find themselves lagging behind when it comes to adopting and leveraging emerging technologies. While exceptions exist, the reality for many organizations is that internal audit has not embraced innovations like artificial intelligence (AI), advanced data analytics, robotic process automation (RPA), and other transformative technologies. This reluctance to innovate not only risks diminishing internal audit’s relevance but also undermines its ability to add value to the organization.
The Current Landscape: Technology Gaps in Internal Audit
A recent global survey by Protiviti highlights the challenges faced by internal audit leaders. The largest talent and skills gap identified was in enabling technology, including AI, machine learning, automation, and advanced analytics. Moreover, 74% of Chief Audit Executives (CAEs) in North America admitted that their departments are not fostering transformation initiatives. These findings underscore a troubling disconnect: while internal audit departments advocate for better technology use across the organization, they often fail to implement these technologies internally.
This inertia threatens to erode internal audit’s ability to stay nimble and deliver timely, impactful insights. Yet, the tools and strategies needed to reverse this trend are well within reach.
Key Technologies Transforming Internal Audit
Many internal audit departments are beginning to explore or adopt emerging technologies to enhance efficiency and effectiveness. Here are some notable examples:
1. Automated Workpapers and Audit Management Software
Internal audit teams still heavily rely on tools like Microsoft Excel and Word, which lack the robust features of dedicated audit management platforms. These platforms offer automated workflows, real-time collaboration, and improved audit trail management. According to the Institute of Internal Auditors’ (IIA) 2022 Pulse report, 54% of respondents expressed a desire to invest more in such solutions.
2. Advanced Data Analytics
Data analytics has been a buzzword in internal audit for over a decade, yet many departments have not fully integrated it into their processes. Analytics can identify trends, anomalies, and risk factors more effectively than manual methods. The IIA report revealed that 68% of internal audit leaders want to expand their investment in data analytics.
3. Open Issue Tracking
For organizations in highly regulated industries, managing hundreds or thousands of open audit issues is a monumental task. Automating this process using specialized tools ensures efficient follow-up, prioritization, and resolution.
4. Governance, Risk, and Compliance (GRC) Tools
GRC tools enable better collaboration with second-line functions and streamline risk management processes. These systems integrate data and workflows, offering a holistic view of enterprise risks.
5. Robotic Process Automation (RPA)
RPA can automate repetitive tasks like data reconciliation, freeing internal auditors to focus on higher-value activities. Although only 34% of respondents to the IIA report have invested in RPA, its adoption is expected to grow.
6. Artificial Intelligence (AI)
AI holds immense potential for internal audit, from automating fraud detection to predictive risk assessment. Few departments have tapped into AI’s capabilities, but those that do will likely lead the profession in innovation.
7. Emerging Technologies: Drones, Robots, and the Metaverse
While still in the experimental phase for most organizations, these technologies can address unique challenges. For example, drones are being used to audit inventory in remote or inaccessible locations, a trend accelerated by the shift to remote work.
Barriers to Technology Adoption
Despite the potential benefits, internal audit faces significant hurdles in adopting new technologies:
- Budget Constraints: Technology investments require upfront costs and ongoing support, including training and maintenance.
- Time Pressures: The “tyranny of the urgent” often sidelines long-term strategic initiatives like technology adoption.
- Skills Gaps: Internal audit teams may lack the expertise to implement and manage advanced technologies, requiring new hires or retraining.
- Leadership Challenges: Effective leadership is crucial to championing innovation and holding teams accountable for progress.
- Organizational Resistance: Gaining buy-in from other departments and leadership can be difficult without demonstrating clear value.
Breaking the Cycle: A Roadmap for Internal Audit Transformation
To overcome these challenges, internal audit departments need to adopt a strategic, proactive approach:
- Develop a Technology-Forward Strategic Plan: Align your department’s goals with the organization’s strategic objectives, emphasizing how technology can enhance audit outcomes.
- Secure Executive Support: Present a compelling business case to senior leadership and the board, highlighting ROI, risk mitigation, and alignment with organizational goals.
- Invest in Training and Talent: Hire individuals with data analytics, AI, or RPA expertise, and provide existing team members with opportunities to upskill.
- Appoint a Transformation Champion: Designate a leader responsible for driving innovation and holding the team accountable for progress.
- Leverage External Partnerships: Collaborate with technology vendors, consultants, and third-party providers to fill gaps in expertise and resources.
- Start Small, Scale Fast: Pilot new technologies on smaller projects to build confidence and demonstrate value before scaling across the department.
Conclusion: The Future of Internal Audit Depends on Innovation
Internal audit has a pivotal opportunity to redefine its role within organizations by embracing technology. Departments that adopt advanced tools and strategies will not only improve efficiency but also enhance their ability to deliver actionable insights, mitigate risks, and create lasting value.
Ready to transform your internal audit function? Learn how Connected Risk’s Internal Audit Management solution can help you modernize workflows, leverage advanced analytics, and ensure compliance. Contact us today for a demo and take the first step toward a tech-enabled audit future!
