Digitally Fit Audit Functions
The notion of ‘digital fitness’, as coined by PwC’s 2019 Global Risk, Internal Audit and Compliance Survey, looks at bringing internal audit and the wider organisation back on the same page. With technology gaps widening, companies without alignment saw digital transforming almost everything. Internal audit, however, was lacking dexterity to swiftly pivot and keep pace with the advisory and assurance requirements of this new environment.
PwC’s survey defines digital fitness in two ways; “having in place the skills and competencies to provide strategic advice to stakeholders and to provide assurance with regard to risks from the organisation’s digital transformation” and “changing the function’s own processes and services so as to become more data driven and digitally enabled so the function can align with the organisation’s strategic risks and thereby anticipate and respond to risk events at the pace and scale that the organisation’s digital transformation requires.”
With this understanding, the survey looked at the dynamics, those audit departments who identified as the most digitally fit of those surveyed and found that 76 percent of those falling into the dynamic audit category achieve decision-making goals at or above the level aimed for. As this digital transformation unfolds and risk profiles shift, dynamics are equipped best to advise stakeholders in relation to smart decision making and deliver results the exceed “reliable technology audit”.
The survey extracted key identifiers of dynamics including an all-in attitude, upskilling and recruiting new talent and incorporating new technology into the business. This all-in attitude encompasses an active involvement in all stages of technology innovations. From early adoption, dynamics function as both consultant and assurance advisors, providing knowledge surrounding risk and governance even when having limited understanding of digital transformation strategies. Whilst not feasible to be involved in every initiative, those significant projects should be an internal audit focus to ensure digital governance frameworks are correctly shaped from initial adoption.
Another of PwC’s recent research, a Risk in Review Study, found only one-third of the 2,000 board members, CEOS and senior executives surveyed are engaging with advanced technologies. Adoption of Artificial Intelligence, machine learning and automation processes remains infrequent, perhaps stemming from the disconnect of what is realistically achievable through digital advances or simply the swift pace in which evolution is moving. Converting technology into measurable gains remains a difficulty for the audit department.
Whereas for dynamics, they hold the knowledge to “audit cloud technologies, automate business processes and the internet of things,” according to PwC, and dynamics have a focus on developing these skills more broadly. Proactive audit is looking forward.
Transformation brought by cognitive technologies have left jobs in internal auditor at a “critical juncture” according to Jim Woods, Global Risk Assurance Leader at PwC. Those successfully making technological headway within their audit and risk functions are reaping results, from improved payoff such as financial growth and heightened customer satisfaction, to a more-effective risk advisory and assurance scope.
Emerging technologies are widening the audit viewpoint. With PwC highlighting the advantages of digitally fit internal audit functions, ensuring internal audit falls within the dynamic category brings a host of stakeholder benefits and longevity in today’s dynamic business environment.