Martha Prince
President, Institute of Internal Auditors, TT Chapter
In the wake of recent organisational changes and ongoing operational challenges, it is imperative that the company’s strategic arm is adequately equipped to provide effective oversight, strong leadership, and purposeful direction. This is achieved, in part, by ensuring that governance structures are adequately instituted in the form of effective risk management processes, robust internal control systems, an embedded ethical framework, clearly defined policies and procedures, appropriate delegation of authority, transparent reporting lines, and a focus on stakeholder expectations and sustainability.
The internal audit profession brings a unique perspective to business leaders by utilising an independent lens that gives a panoramic and objective view of operations and systems. Internal audit is a proactive resource that should be engaged to provide assurance, advice and insight on the governance pillars of the organisation. One such pillar is enterprise risk management.
An adequately instituted risk management framework creates the foresight that is required to ensure that possible threats and roadblocks are identified and assessed, and that the impact of these occurrences on the achievement of strategic objectives are adequately controlled.
Internal audit supports this area by providing assurance to the board and senior executives that the risk management process is working optimally, and key risks are contained. In addition to the foregoing, the function can serve in a consulting capacity by leveraging its overarching knowledge of the organisation, together with its risk expertise, to advise on tools and techniques that strengthen the risk management process and recommend appropriate risk mitigation measures.
Internal audit is also uniquely positioned to acquire a deep appreciation of business culture, thereby strengthening the function’s ability to assess the alignment of organisational behaviour to enterprise objectives.
The outcome of the assessment and the resulting recommendations aid the leadership team in making tactical and informed decisions to drive organisational success via the sustained achievement of goals, and with instituting measures to shape a revitalised and motivated workforce.
Although internal audit plays an integral part in advising on strategies and operations, it is important to note that there is a major role for other business leaders in ensuring that essential structures are in place to support and execute business objectives.
This is succinctly outlined in The Institute of Internal Auditors’ (IIA) Three Lines Model. This illustration portrays the responsibilities of the governing body, management and internal audit, and explains that the former is tasked with facilitating and developing strong governance and risk management systems, while the latter “provides independent and objective assurance and advice on the adequacy and effectiveness of governance and risk management”.
The model emphasises continuous collaboration, co-ordination and communication amongst all levels of the enterprise to facilitate organisational alignment. Although responsibilities of the three lines differ, they all share a common goal at heart: the sustainable success of the organsation.
To effectively execute its pertinent responsibilities, the internal audit profession is guided by the recently revised IIA’s Global Internal Audit Standards.
The standards serve as a foundation for improving and evaluating the quality of the internal audit function and positioning the profession as a trusted advisor and advocate for business success.
They serve as a lighthouse, providing direction and insight on the following areas: purpose of internal auditing, ethics and professionalism, governing the internal audit function, managing the interal audit function, and performing internal aaudit services.
To champion a collaborative relationship amongst all enterprise sxecutives, the standards include ‘essential conditions’ that demarcate the responsibilities of the board and senior management in supporting an effective and independent internal audit function, and promoting the need for consistent communication. This reinforces the profession’s role as a trusted advisor while safeguarding objectivity requirements.
Working hand in hand with the Standards, the IIA’s Topical Requirements provide mandatory guidance to assist Internal Audit functions in providing assurance and advice on specific audit areas, such as organisational behaviour and cybersecurity.
These guidelines enhance conformance with the Standards and strengthen the quality of Internal Audit services by providing a thorough and step-by-step approach to performing engagements in these areas.
In addition to the Topical Requirements, Global Guidance is a second IIA resource that was developed to support the implementation of and adherence to the Global Internal Audit Standards. It constitutes Global Practice Guides and Global Technology Audit Guides®.
Both provide information and best practices for internal audit services and outline detailed techniques to accomplish the related activities. Global Guidance has been issued for various operational disciplines, including procurement, credit risk, and fraud.
As members of the IIA, Internal Auditors are furnished with all the tools that are required to comprehensively analyse the enterprise’s operations and put forward feasible recommendations for improvement and enhanced efficiencies.
Another area of importance to ensure that internal auditors are well positioned to perform the requisite services is the attainment of relevant certification.
IIA qualifications such as Internal Audit PractitionerTM, the Certified Internal Auditor® and the Certification in Risk Management Assurance® equip professionals with the necessary expertise to successfully carry out internal audit responsibilities. Internal Auditors who possess these credentials demonstrate professional credibility and a high level of skill and competency.
The role of the internal audit profession in creating and protecting organisational value has been carefully dissected. The ability of the function to determine how well processes and systems support strategic accomplishments, and to consistently offer workable solutions to reduce inefficiencies, is innate to its purpose. This must be heralded in all quarters as business leaders recognise the importance of the independent third line in evaluating and improving the effectiveness of governance, risk management and control measures.
As organisations navigate uncertainty and complexity, the internal audit function stands as a trusted partner: strengthening governance, enhancing resilience, and enabling thriving enterprises.
Martha Prince is president of the Institute of Internal Auditors, TT Chapter
