Cangemi Perspectives: Is your IA function a technology-enabled Evolver?
Michael P. Cangemi, a former CAE and C–level executive, is a Senior Fellow and advisory Board Member of the Rutgers Continuous Auditing and Reporting Lab. The opinions expressed in this article are solely those of the author.
Can you answer in the affirmative that your internal audit function is technology-enabled? Is it innovative? These are the questions explored in the recent PwC report, 2018 State of the Internal Audit ProfessionStudy.
The report describes the ever-expanding pace of new technology deployment, a topic of which we’re all well aware. What attracts me to this report, given my background as a former CAE who went on to also act as a CIO, CFO, CEO, Board Member and Audit Committee chair, is PwC’s focus on one of the top concerns of CEOs.
PwC learned from their prior and recent Global CEO survey that “the speed of technology change is a top concern among CEOs” and “boards want internal audit functions to have a perspective on the risks that new technologies bring and on the controls in place to appropriately manage those new risks.” This led PwC surveying board members, senior executives and audit professionals in 92 countries to see how IA functions are building tech-enabled functions. What they learned is that advanced IA functions are evolving the tech and talent models “in lockstep.” (See prior Cangemi Perspectives blog that addresses IA skills.)
The PwC report notes that 14% of internal auditors are in the advanced stages of technology adoption. PwC labels them the ‘Evolvers’, and a majority of internal audit functions (nearly half—46%) are following their lead. This group is labeled as the ‘Followers’. Not surprisingly, Evolvers and Followers are closely aligned with the business. As a result, 75% of IA functions using advanced tech are contributing significant value to the business, vs. 54% for Followers and only 34% for Observers. (See prior Cangemi Perspectives blog, which addresses how using tech helps IA develop business acumen.)
The PwC study says, “For internal audit to continue to create value for its stakeholders, it needs to stay current on what technology innovations mean to their organization.” As an example, the study quotes Alvin Bledsoe, Audit Committee Chair at SunCoke Energy: “The real pitfall for Internal Audit is if they don’t stay current on new technologies then they won’t have a seat at the table and be perceived to be adding value; they need to stay current (not be experts) to stay relevant.”
What defines an advanced Evolver IA function has a lot to do with tech tools. In my writing I have defined data analytics tools as a must-have foundation tool for IA. This report expands the foundation tools list including data extraction, work flow/dashboarding/reporting tools, GRC tools, use of analytics tools and analytic visualization.
Regarding data extraction, the PwC reports says that 74% of IA functions are using these now and this is expected to grow to 94% of IA functions within two years. These results support the CaseWare Audit Team Trends 2018 Survey, in which 89% said use of data analytics was important or very important.
So, I ask, can you answer in the affirmative that your internal audit function is technology-enabled, which is what the C suite expects? If so, congratulations! You are an Evolver! If not, start in that direction today.
Stay tuned to the CaseWare Analytics blog for more of my thoughts on GRC and audit management.
About Michael P. Cangemi
Michael P. Cangemi is a senior fellow at Rutgers University and serves on the Rutgers Continuous Auditing and Reporting Lab Advisory Board. A former CFO and CEO, a prolific writer, active speaker and senior advisor to various companies, Mr. Cangemi now focuses on providing continuous auditing, continuous monitoring and analytics intelligence for GRC, Finance and Business Process Improvements. He also serves on FEI’s Committee on Finance & Technology (CFIT) and their GRC Sub Committee; the EDPACS Editorial Advisory Board; and the ISACA Governance Committee.