Recent research by the Institute of Internal Auditors Canada aims to dispel some of the myths about internal audit and provide government executives, audit committees and chief audit executives with strategies to unlock the power of internal audit and to realize sustained value for public organizations and taxpayers.
The research demonstrates that the value of internal audit to senior executives is like a hidden gem – not always realized for the asset that it is.
The research, which will be released in the Fall of 2014 at the IIA Canada’s national conference in Ottawa, maintains that there are three separate, but overlapping value propositions for the function in a public sector context:
• Internal audit as protector: Internal audit provides the deputy head and audit committees with assurance and oversight. That means comfort that the organization’s systems, practices and controls are working as intended. When controls are failing, or are at risk of failing, internal audit provides trustworthy and reliable information in support of improvements. By acting as a trusted, “early warning system,” internal audit helps to safeguard not only physical and financial assets, but also public sector reputations and the taxpayers’ confidence.
• Internal audit as educator: Internal audit maintains expertise in systems of management control, risk management and governance, all of which are core responsibilities of the deputy head and are critical to good public administration. Internal audit has in-depth knowledge of best practices and expectations in these areas and, thanks to its “birds-eye-view” of the organization, gathers insight on how well these systems are working. If properly harnessed, this insight can be invaluable to officials. Not only does it assist executives in better understanding their organization’s strengths, weaknesses and emerging or systemic risks, but it also offers them the ability to identify opportunities for increased effectiveness, efficiency and innovation – insight that is in high demand in the current context.
• Internal audit as trusted advisor: While the provision of assurance is the bread and butter of internal auditors, their value as advisors to the deputy should not be overlooked. Few other functions in government have the organizational placement, unfettered access and objectivity that are enjoyed by internal audit. These qualities translate to one word: trust. Internal audit standards explicitly position the function as both an assurance and a consulting function. Having a trusted, in-house and objective consultant on issues of management and control provides deputies and senior executives with honest, reliable and relevant advice as they deal with the ever-increasing pace of change in government operations.
Oversight. Insight. Foresight. These are but three of the strategic outcomes to which internal audit can contribute. But is the function fully realizing this potential value? Preliminary research results indicate that more work needs to be done. Like other parts of the government, internal audit functions face operational and strategic challenges to realizing full value.
The authors of this paper maintain that these challenges can and must be overcome. By engaging the internal audit community and key stakeholders across the federal and provincial sectors, the authors will identify simple and high-value strategies to help unlock the power of the internal audit function.
The results of this research, including strategies for senior executives, will be presented at the IIA Canada’s 7th Annual National Conference, in Ottawa on October 5–8, 2014. The conference attracts leaders from across the country and around the world to share insights on internal audit, governance, risk and control. This is the premier event for the internal audit profession in Canada and provides great value to auditors as well audit committee members and other executives. Among the conference streams are leadership and public sector tracks. For more information, please see www.iiacanadanationalconference.com