Scoring Internal Audit’s Value
Survey finds profession’s main performance focus is on inward-facing processes
ALTAMONTE SPRINGS, Fla. (Nov. 16, 2015) — In many organizations, conveying what internal audit brings to the table poses a challenge, with management, boards, and investors often struggling to assign value to its services. Since 2010, the Institute of Internal Auditors (IIA) has described the profession’s value proposition as a combination of assurance, insight, and objectivity, yet disconnects remain.
A new report from The IIA Research Foundation (IIARF) finds that chief audit executives identify inward-facing processes, such as how much of the annual audit plan gets completed, as the top performance measures in delivering value. While those measures indeed are valued by stakeholders, other important factors, such as client satisfaction and fulfilling specific expectations of key stakeholders, rated lower.
The report, Delivering on the Promise: Measuring Internal Audit Value and Performance, also raises a red flag based on survey results that found 15 percent of CAEs indicate that no formal measures of value have been established at their organizations.
“Identifying mutually agreed upon measures of performance between internal audit and its stakeholders is crucial to establishing internal audit’s value,” said IIA President and CEO Richard Chambers, CIA, QIAL, CGAP, CCSA, CRMA. “There is opportunity to improve when nearly one in seven organizations have no such measures in place.”
The report concludes with a succinct and direct process to help internal audit leaders align performance expectations with stakeholders. It provides step-by-step directions on learning customer expectations, developing outward- and inward-facing performance measures, implementing tools and methodologies to measure performance, and reporting back to stakeholders.
The report bases its findings on the 2015 Common Body of Knowledge (CBOK) Global Practitioners Survey, which drew more than 14,500 respondents from 166 countries earlier this year. The survey is part of the CBOK study, the largest ongoing study of internal audit practitioners and their stakeholders.
The report is the latest in a series being produced by the IIARF based on CBOK data. More than two dozen reports are planned through July 2016. It and other CBOK reports can be downloaded for free at the CBOK Resource exchange at www.theiia.org/goto/CBOK.