Internal Audit – untapped potential?

Internal Audit – untapped potential?

The Chartered Institute of Public Finance and Accountancy’s (CIPFA) “Internal audit: untapped potential” report provides an insight into the profession in a public sector context. I was part of the focus groups that fed into the report and helped shape a number of key reflections for auditors, management and audit committee members alike.  With such a breadth of respondents from all relevant stakeholders, it is safe to say that the report represents the state of the nation for internal audit in the public sector.

What are the issues highlighted?

The report flags a number of areas which the profession is tackling well.  It was pleasing to see an increasing number of respondents view Internal Audit as supporting the management of the organisation with 87% agreeing or strongly agreeing with that view.

The report also recognises the strong assurance role that internal audit delivers for public bodies with 80% of respondents seeing this as a key role.  However, this is set against much lower recognition of the advisory or consulting role that internal audit can deliver.  A key part of internal audit’s role is to provide advice to their clients to improve governance, risk management, performance outcomes or control processes.  To maximise the value from your audit provision an appropriate balance needs to be struck between the three main strands of audit:

• Assuring processes and controls in place
• Advising clients on what is being implemented as it happens
• Helping to prepare for an uncertain future

Assurance remains at the heart of all internal audit do, but going beyond that well established core is when we as auditors support our clients in the best way possible.

The report identifies notable differences in the views of management, audit committee members and auditors on the level of maturity of development of assurance frameworks.  Heads of Audit are consistently noting further development is needed to understand and gain sufficient assurance compared to the views of management.  This highlights a key area where auditors can support in advising how assurance needs are identified and evidenced to enable audit committees to gain appropriate assurance that the organisation is functioning well.

Context and impact for the Public Sector

Overall, the report highlights lot of positives for how internal audit is operating, but also opportunities to obtain greater value from internal audit by getting the work focused on the areas of greatest need.  Fundamental to this approach, is helping organisations to properly understand their risk management process and seek appropriate assurance that it operates effectively.

Key takeaways for those in the Public Sector

At the heart of things, it’s important to reflect on how well your organisation is doing the following:

• Considering and managing risk as an embedded part of everyday operations
• Understanding the assurances necessary to be comfortable that the organisation is well controlled and effectively delivering its objectives
• Within your audit provision prioritising the right balance of assurance, advice and preparing for the future

How Azets can help

Across our clients, we support in the development of risk management frameworks including developing shared understanding by key stakeholders to help place focus on the strategic priorities of the organisation.  Once established, this enables us to support you in seeking appropriate assurances in the management of key risks drawing on the appropriate range of assurance providers. 

If you have any questions about the findings of the report, or require support in relation to anything discussed, please get in touch with your usual Azets contact or a member of our specialist Internal Audit team.