In today’s complex business landscape, the Internal Audit (IA) function is essential not just for compliance but for enhancing organizational resilience and strategic decision-making. Yet, its effectiveness hinges on strong support and alignment with C-level executives, the board of directors (BOD), senior management, and the audit committee.
The 2024 Global Internal Audit Standards from the Institute of Internal Auditors (IIA) provide actionable guidance to build and sustain this alignment. By adhering to these standards, organizations can create a governance framework that ensures Internal Audit operates effectively and independently.
The Role of Leadership in Supporting Internal Audit
Empowering Internal Audit with a Clear Mandate
- Reference: Standard 6.1 - Internal Audit Mandate, p. 39.
- The board and senior management must authorize the Internal Audit function with a well-defined mandate. This ensures clarity on IA’s role, responsibilities, and authority.
Ensuring Independence
- Reference: Standard 7.1 - Organizational Independence, p. 46.
- Independence is critical for objective assurance. The Internal Audit function should report directly to the board or audit committee, avoiding undue influence from management.
Fostering Regular Interaction
- Reference: Standard 8.1 - Board Interaction, p. 52.
- Effective collaboration between the audit committee, the board, and IA ensures alignment on risks, priorities, and organizational objectives. Regular and open communication builds trust and ensures IA’s focus on strategic goals.
Providing Adequate Resources
- Reference: Standard 10.1 - Financial Resource Management, p. 72.
- The board and management are responsible for ensuring that IA has access to the financial, technological, and human resources needed to perform effectively.
Encouraging Continuous Quality Improvement
- Reference: Standard 12.1 - Internal Quality Assessment, p. 86.
- To maintain trust and relevance, organizations should prioritize regular quality assessments and improvements of the IA function, fostering accountability and reliability.
The Human Side of Leadership and Internal Audit Alignment
Beyond the frameworks and policies, alignment is about trust, communication, and shared purpose. Leaders must view Internal Audit not as a watchdog but as a strategic partner capable of identifying opportunities and mitigating risks.
Practical Steps for Leadership to Support Internal Audit
Establish Clear Expectations
Formalize the IA charter with clear roles and responsibilities aligned with the organization’s strategy.
- See: Standard 6.1, p. 39.
Facilitate Transparent Communication
Schedule regular meetings between the IA function, the board, and senior management to discuss priorities, findings, and risks.
- See: Standard 8.1, p. 52.
Invest in Resources
Ensure that IA has sufficient resources for its operations, including technology, training, and skilled professionals.
- See: Standard 10.1, p. 72.
Promote Ethical Standards
Lead by example in fostering a culture of integrity and objectivity, enabling IA to work without fear of undue influence.
- See: Standard 2.2 - Safeguarding Objectivity, p. 22.
Support Quality Improvements
Commit to periodic external quality assessments to benchmark IA performance and implement improvements.
- See: Standard 12.1, p. 86.
The Role of The IIA in Bridging the Gap
The Institute of Internal Auditors (IIA) offers comprehensive support to strengthen this alignment:
- Guides and Articles: Highlighting best practices for governance and IA collaboration.
- Training and Conferences: Equipping leaders and auditors with the tools to work effectively together.
- Consultation Services: Tailored advice for leadership and IA alignment.
Conclusion
Alignment between leadership and Internal Audit is a strategic imperative. When boards, C-level executives, and audit committees collaborate with IA, they create a governance framework that protects and creates value.
By embracing the principles and guidelines in the IIA’s 2024 Global Internal Audit Standards, organizations can foster trust, transparency, and resilience. Together, let’s make leadership and Internal Audit collaboration a cornerstone of sustainable success.