By: Lynn Sullivan

Introduction

Internal audit plays a key role in an organisation’s corporate governance in that it provides independent assurance that an organisation’s governance, risk management and internal controls are operating effectively. In recent years, several factors have emerged as key drivers of change within the internal audit profession, effectively shaping its priorities and practices. 

A traditional approach to internal audit is no longer sufficient to handle this evolving landscape; it is therefore no longer a case of business as usual and internal auditors need to fully understand these key drivers and their implications to successfully navigate and adapt to these changes. 

Key drivers of change include among others: 

Regulatory and Compliance Requirements

Regulatory compliance is a significant driver of change for internal auditors, as organisations are subject to an increasing number of laws, regulations, and industry standards. The introduction of new regulatory requirements often demands increased transparency, risk assessment, and internal control evaluations as compliance failures may result in penalties, reputational damage and legal consequences. 

Internal auditors play a vital role in assessing the effectiveness of internal controls designed to ensure compliance, through regular evaluation of control frameworks, testing control activities, and identifying control gaps. Internal auditors therefore need to develop a deep understanding of relevant regulations and compliance requirements applicable to their industry and stay updated on changes in laws, regulatory frameworks, and reporting obligations is crucial. Compliance risk assessments may be utilised to further identify and prioritize areas of non-compliance or potential regulatory risks. 

Technological Advancements

Advancements in technology significantly impact internal audit, driving change in the way audits are conducted and influence the skills and capabilities required of internal auditors. Automation, data analytics, artificial intelligence (AI), and machine learning (ML) enable auditors to enhance their efficiency, perform comprehensive risk assessments, and analyze large datasets for deeper insights and provision of more valuable recommendations. 

It is essential for internal auditors to embrace these changes, continuously develop their skills, and leverage technology to drive efficiency and effectiveness in their audit practices. Internal auditors should acquire skills in (1) data analytics tools and techniques to effectively identify patterns, anomalies, and trends within the data and (2) Robotic Process Automation (RPA) to streamline and automate manual and repetitive tasks to further enhance the efficiency and effectiveness of audits by freeing up internal auditors to focus on higher value tasks and areas of higher risk. 

Furthermore, with the increasing importance of cybersecurity, internal auditors should possess knowledge of emerging cybersecurity threats, data privacy regulations, and IT governance frameworks. Collaboration with IT teams is crucial to assess the effectiveness of cybersecurity controls and provide recommendations for improving security measures.

Evolving Risk Landscape

The evolving risk landscape is a key driver of change for internal auditors. The business environment is constantly evolving, and new risks emerge while existing risks may change in nature or magnitude. 

Internal auditors should stay updated with emerging risks and changes in the risk landscape. They should actively scan the external environment, industry trends, and regulatory developments to identify new and evolving risks, working closely with management and other relevant stakeholders to assess the significance and potential impact of these risks on the organisation. The changing risk profile may necessitate adjustments to audit plans, methodologies and resource allocations. The adoption of an agile and flexible audit approach is therefore key.     

Stakeholder Expectations

Stakeholders, including boards of directors, senior management, and shareholders, have high expectations from internal audit. Internal auditors are expected to provide strategic insights, assess organisational performance, and contribute to improving governance and risk management processes.

Internal auditors should proactively identify opportunities for process improvements, cost savings, operational efficiencies, and revenue enhancement. In addition, regular engagement and proactive collaboration helps in understanding stakeholder expectations, obtaining necessary information, and ensuring alignment between audit activities and organisational goals. 

Focus on Value Creation 

Internal audit is increasingly shifting its focus from a purely compliance-oriented function to a value-adding one, by providing insights, recommendations, assurance on strategic initiatives and operational efficiency. To this end, internal auditors are encouraged to identify opportunities for process improvements, cost savings, operational efficiencies, and revenue enhancement. 

Internal auditors need to align their audit activities with the organisation’s strategic objectives. This requires a deep understanding of the organisation’s business model, industry dynamics, and key strategic initiatives. Internal auditors should also actively engage with senior management and the board to identify areas where internal audit can provide value and support the organisation’s strategic goals; they should understand the value drivers of the organisation and assess how risks and controls impact these drivers. 

By embracing a value-focused approach, internal auditors can position themselves as strategic partners to the organisation and contribute to its success. It requires a shift in mindset, expanded skills, and a proactive approach to identify opportunities for value creation. 

Organisational Changes 

Internal audit may experience changes due to organisational restructuring, mergers and acquisitions, or the implementation of new business strategies. Organisational changes often lead to a realignment of strategic priorities and objectives and may further introduce new risks or alter the existing risk landscape.

Internal auditors should understand the new organisational structure, objectives, and risk profile resulting from these changes. Organisational changes require internal auditors to be flexible and adaptable. They should be prepared to adjust their audit plans, timelines, and resource allocation to accommodate the changing needs of the organisation. Flexibility, collaboration, and a proactive approach to risk assessment are key in navigating the impact of organisational changes on the internal audit function.

Professional Standards and Practices 

The internal audit profession is governed by professional standards and practices, such as the International Professional Practices Framework (IPPF) issued by the Institute of Internal Auditors (IIA). These standards promote consistency, professionalism and ethical conduct within the internal audit function and evolve over time to reflect changes in the internal audit profession and the business environment. Changes in these standards, guidelines, and best practices influence internal audit’s approach, methodologies, and reporting requirements. 

It is essential for internal auditors to stay updated with professional standards, seek continuous improvement, and foster a culture of excellence within their organisations. By embracing professional standards and practices, internal auditors can enhance the credibility, effectiveness, and value of their work.

Emerging Expectations for Internal Auditors

Financial and Accounting Landscape

The financial and accounting environment continues to evolve rapidly, influenced by dynamic regulatory developments and changes in financial reporting standards such as IFRS and GAAP. These changes present increased complexity in financial disclosures and sustainability reporting, necessitating greater diligence from internal auditors.

Internal auditors are expected to possess a sound understanding of financial and accounting principles to effectively assess the integrity of financial reporting processes, compliance with applicable standards, and the adequacy of financial controls. As organisations increasingly integrate non-financial disclosures, such as environmental, social, and governance (ESG) metrics, internal auditors must expand their competencies to include assurance over integrated and sustainability reporting.

Industry-Specific and Technical Requirements

Internal audit must align with the specific regulatory, operational, and technical requirements of the industry in which the organisation operates. These industry-specific factors significantly influence risk profiles, control frameworks, and compliance obligations. Internal auditors should develop and maintain sector-specific knowledge, stay informed about relevant regulatory developments, and collaborate with operational teams to tailor audit plans that address the unique risks and priorities of their industry.

Health and Safety Compliance

Health and safety remains a critical area of focus, particularly in industries with high exposure to physical risks, such as manufacturing, construction, mining, and transport. Compliance with health and safety regulations is not only a legal obligation but also essential to ensuring employee wellbeing and operational continuity.

Internal auditors have an important role in evaluating the effectiveness of health and safety management systems, including adherence to occupational health and safety legislation, incident response protocols, training programs, and workplace safety culture. This includes conducting audits of safety procedures, investigating root causes of incidents, and assessing the implementation of corrective and preventive actions.

Conclusion

In conclusion, the internal audit profession has undergone significant transformation due to various drivers of change, and it continues to evolve in response to growing complexity across regulatory, technological, financial, and operational domains. These shifts demand that internal auditors continually adapt their skills and approaches to meet the changing needs of their organisations.

Today’s internal auditors are no longer limited to evaluating controls—they are multi-disciplinary professionals who combine financial acumen, technological proficiency, regulatory insight, strategic thinking, and industry-specific knowledge. A future-ready internal audit function delivers not just assurance, but also meaningful insight and forward-looking guidance.

To create real value, internal audit must move beyond a compliance-oriented mindset and adopt a proactive, strategic role. This involves agility, strong stakeholder engagement, and a deep understanding of organisational goals and risks. By anticipating emerging challenges and contributing to performance and governance, internal auditors can build trust and become key partners in driving sustainable success.