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There will be a significant increase in internal audit's usage of dynamic visualization techniques in reporting to and engaging with stakeholders in the coming years. Advanced internal audit departments are already using dynamic reporting and visualization techniques, but many more internal audit departments need to embrace dynamic reporting in order to strengthen their impact and influence.
Dynamic visualization means moving away from static, text-heavy, word-processing-type reports and moving towards more interactive reporting that allows the user to click on certain aspects of the report and drill into particular areas. This puts the user in control of the reporting and the insights based on what's of interest to them. Terry Hatherell, Internal Audit Leader, Deloitte, explains “it embeds charts and graphics to tell the story. It's much better in terms of trying to communicate and get consensus around insights.”
Dynamic reporting is critical to insuring that internal audit remains nimble and is able to adjust to changes in the internal and external risk landscape of the organization. Dynamic reporting will also change the game in terms of how internal audit is communicating and engaging with its stakeholders. Hatherell says, “The old adage ‘a picture is worth a thousand words,’ certainly applies in dynamic reporting.”
Internal audit departments are not moving quickly enough and need to get on the analytics train now. Hatherell says, “We’ve seen the evidence of those internal audit departments that are using analytics. They're much more effective. They're demonstrating more value. They're driving greater insights within their organizations. We would strongly suggest that internal audit departments shift their communication methods towards being more dynamic and being more visual, to help stakeholders digest and interpret the insights that are being communicated.”
In order to strengthen the impact and the influence that internal audit is having within their organizations, Chief Audit Executives also need to embrace new talent models to insure that internal audit has the required skills and capabilities. Speaking about a recent survey of Chief Audit Executives conducted by Deloitte, “Evolution or irrelevance? Internal Audit at a crossroads,” Hatherell says, “The research identified specialized information technology skills, data analytics, as well as model risk skills as being the top three specialized skills that heads of internal audits believe are gaps within their current talent model.”
Predictive analytics and risk anticipation is another area that CAEs and internal auditors will need to pay closer attention to. Hatherell says, “I know that when I deliver internal audit with my clients, if there happens to be a fraud, or a risk failure, or a significant financial loss within their organization, it's only a matter of time before the stakeholders come to us as internal audit and ask the tough questions - rightfully so - in terms of how could this have happened? How come we weren't able to prevent it? What it tells me is that stakeholders are really expecting internal audit to see around the corner, to anticipate risks, to help organizations prepare for the future.” Internal auditors can accomplish this through taking advantage of the predictive technologies and predictive analytic tools that highly effective internal audit departments are using currently. These tools can predict the likelihood of a large transformational initiative within an organization and predict the likelihood of success. Leading internal audit departments are using these tools today to help anticipate the future.
Key gaps in skill sets must be addressed in order to increase the impact and influence of internal audit. Stakeholders are expecting their audit teams to be predictive, and auditors can achieve this by embedding analytics into the internal audit lifecycle.