We are increasingly seeing a transformation of Internal Audit in the market, which assumes a variable role in different business segments, depending on the context of maturity and complexity of the associated corporate governance environment.
In this context, qualified companies offer internal audit services and have teams of consultants who help organizations achieve their objectives, with an economic, strategic and disciplined approach to the risk management process, which gives even more emphasis to this transformation. of internal audit.
Activities related to internal auditing aim to add value and suggest improvements in an organization's operations, and are carried out in different environments, for different objectives. Organizations aim for competitive and sustainable positions, seeking to manage effectively and profitably, and it is in this context that the transformation of internal audit emerges, supporting the search for adequate resource management.
In recent years, the role of internal audit has changed, giving way to meeting new demands, arising from pressure from regulatory bodies, in addition to the need for improvements in corporate governance.
Therefore, there is a transformation of internal auditing, which has increased its focus on risks, started to act more effectively in corporate governance and participate more actively in improving processes as a whole. Companies have come to believe that risk management has a highly positive impact and that many of their internal areas can improve through the work of qualified external professionals.
Today, we can identify the main priorities of internal audit as identifying opportunities to reduce costs in the business, improving the risk assessment process and improving the ability to monitor emerging risks. In this way, the transformation of internal auditing is moving towards focusing on the internal audit methodology and the alignment of the business strategy.
This strategy has as its starting point the alignment of the organization's strategy with the internal audit strategy, focusing on the main business risks. To develop the strategic plan, some approaches are necessary, such as defining the internal audit vision and developing an operational strategy.
Internal Audit and Its Market Performance
Internal auditing is an independent and objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization achieve its objectives through a systematic and disciplined approach to evaluating and improving the effectiveness of risk management, control and governance processes. This definition is globally recognized and accepted, being published by the Institute of Internal Auditors (IIA), represented in Brazil by IIA Brasil.
Changes in the economic scenario are almost instantaneous and the challenge of transforming internal audit is to follow them at the same speed. As the market grows, it becomes difficult for the company to stay in the spotlight; constant effort is needed to not be left behind. Hence the need to identify risks, optimize costs, seek strategic information and support governance, among other actions that are the focus of internal audit work.
Every day, more managers seek the evaluations and suggestions of internal audit with security and reliability that will be assisted in the risk identification strategy and improvements in the company's internal controls.
This transformation of internal audit not only helps the company to gain efficiency in processes but also
it also helps to generate value for the business as a whole. Through professionals with great technical experience and the ability to seek innovative ideas, we work to anticipate problems by suggesting flexible solutions to the needs of each company.
The main objective of internal audit services is to add value and improve an entity's operations through a systematic and disciplined approach, which evaluates and improves the efficiency of risk management, control and governance processes.
Internal audit professionals need to understand not only the company's internal processes, but also the business area in which it operates. They must follow the transformation of internal audit, be highly qualified and have extensive experience in different business areas, developing a strategic vision and easily identifying the risks to which the company is vulnerable.
Internal Audit – Best Practices
Many professionals share the opinion that an efficient internal audit program can generate real profits for an organization. On the other hand, a weak internal audit program can create chaos and different possibilities for physical and financial losses. Yet another reason to transform internal auditing.
In this sense, best internal audit practices can help organizations maintain compliance with their organizational obligations. It is possible and feasible for you to avoid problems and improve operational efficiency at the same time.
Some concepts on the topic, presented below, may help you in conducting and reorienting internal audit activities. For example, internal audit professionals should or could be considered a valid and efficient option when:
- External internal audit specialists are not always necessary, however, a second look can contribute to a more complex process. Not every organization has the experience necessary to conduct a proper internal audit. External auditors bring an innovative approach and external experience that can be very valuable to daily internal audit routines.
- External auditors provide an objective view and eliminate many biases that might be present if the team consisted solely of internal audit.
- An internal audit work cannot be considered reliable if the subject is not adequately mastered by the audit team.
- To adjust normal internal audit programs, programs need to be built into the business process and not deleted, which is often the case.
- Many internal audit programs are focused on compliance and legislation but neglect risk.
- When organizations do not understand the importance of audits, they delay carrying them out or reduce resource allocation. It is necessary to allocate sufficient funds for audits, this initiative must come from the senior management of an organization.
- Internal audit programs should be revisited periodically to assess whether they remain appropriate in light of changing circumstances.
For there to be a transformation of internal auditing and for an internal audit team to be formed, some skills must be required. Although there are procedures that establish the minimum number of hours for a given size of company, the number of auditors varies primarily with the type and complexity of an industry and the scope of the audit.
When forming the team, internal audit professionals must have knowledge of the company's processes and specific control methods for the audited risks, great communication skills and humility. Review of working papers and appropriate segregation of duties should also be considered when an internal audit team is formed. And as team size increases, skill sets can become isolated to individuals.
Application of the Swot Matrix in Internal Audit
There are many needs in the market for internal audit activities, and as a result, as a rule, the strategic plan for this action must be periodically reviewed and adjusted. In this sense, an analysis of the internal audit SWOT matrix is satisfactorily recognized as an alternative for identifying the main internal and external factors that are important to achieve the defined strategy.
SWOT analysis is indicated for diagnosing environments, internal or external to the organization, and strategically provides techniques for identifying, in the internal environment, strengths and weaknesses, and in the external environment, opportunities and threats.
In the transformation of internal auditing, as internal auditing is an independent activity that provides consultancy, examining the adequacy, efficiency and effectiveness of operations and performance of the organization's areas, objectives and policies, it depends on tools that seek information that is credible to the audit objective.
The internal audit SWOT matrix is made up of four elements, namely: 1) STRENGTHS, which are characterized by the organization's skills, positive actions and competencies. 2) WEAKNESSES, which are negative characteristics, that is, points where the lack of capacity generates problems or lack of control. 3) THREATS, which correspond to external characteristics that are negative and cannot be controlled and 4) OPPORTUNITIES, external characteristics that positively influence the
management.
By building a SWOT matrix, internal audit makes a rich contribution to the quality of work, as it is attentive to weak and strong points and the adequacy between external and internal factors, developing a strategic and effective diagnosis. SWOT thus becomes an integral part of strategic planning methods, which analyzes scenarios, compiles the information collected through the four elements and generates a structured matrix. In addition to being a strategic tool, it also enhances focus and directs results, providing credibility to information
obtained by the internal audit team.
Below, in detail, topics related to the four elements of SWOT:
FORCES
- Defined vision, mission, values and internal audit documents, as well as clear, concise and objective roles, responsibilities and reports;
- Policies, procedures and manuals, including formal reporting standards and templates;
- Individual training plans and the possibility of staff certification;
- Formal follow-up of recommendations and established process to
identify points of attention; - Constructive relationship with senior management, audit team and others
related entities; - Quality assurance and improvement program remains duly formalized and
in operation; - Use of the Integrated Audit System, including the monitoring process
of recommendations;
WEAKNESSES
- Limited staff;
- Significant changes in personnel;
- Institutional knowledge gap;
- Skills gaps due to limited human resources;
- Limited use of data analysis and data mining;
- Limited career opportunities for personnel within the organization and in the market in general;
- Limited participation as an observer on various Boards;
- Low support from senior management in the services provided and the objectives intended for each job;
- Scarce time and insufficient financial resources;
OPPORTUNITIES
- Improve the perception of the team's skill, knowledge and capabilities;
- Educate stakeholders about the role and capabilities of auditing
internal; - Engage in new initiatives early to incorporate appropriate controls and
efficient; - Greater collaboration with other assurance functions, including warranty management
scratchs; - Introduce risk and control the application of self-assessments at different levels;
- Improve knowledge and skills in data analysis, as well as
identification of new technologies and tools available on the market; - Effective use of outsourcing and co-sourcing of the function, identifying the best
possibility for the organization considering the reality in which it operates and
short, medium and long-term goals;
THREATS
- Slow organization to implement recommendations;
- Impediment of independence, or influence of undue areas or people;
- Ineffective communication with management;
- Reduction in managerial cooperation;
- Widening skills gaps;
- Staff turnover;
- Lack of awareness of the evolution of organizational strategies and emerging risks, such as cybersecurity, technological risks, among others;
Therefore, for this transformation of internal audit to occur, the market is increasingly looking for specialist professionals, with the necessary experience to be capable of these challenges and strategic initiatives.
Based on this transformation of internal auditing and the complexity of demands, several contributions are present on the market, which have as their distinguishing feature the extensive internal auditing knowledge of the working professionals, in order to assist management in identifying critical areas of risk for practically any type of risk. business, with a highly focused and strategically oriented approach.
TATICCA – ALLINIAL GLOBAL is already recognized by its clients and in the Brazilian market for providing services through professionals with the highest technical standards, auditors act as consultants, offering suggestions and solutions to improve the management and control of organizations. We provide services designed to strengthen the reliability of information for use by shareholders, investors, creditors, regulators, citizens, administrators and other interested parties. We help the
companies in all aspects of internal auditing, from developing audit plans and strategies to conducting the audits themselves. We assist our clients in person and remotely, and offer practical recommendations that our clients can use to make decisions for continuous improvement in real time.
Please contact TATICCA – ALLINIAL GLOBAL, which operates throughout Brazil and globally, with integrated auditing, accounting, tax, corporate finance, technology, risk advisory, business consultancy and training. For more information, visit www.taticca.com.br or email taticca@taticca.com.br and find out more. Our company has professionals with extensive experience in the market and has certified methodologies for carrying out activities.