Where Do We Go From Here? – Internal Audit’s Roadmap for the Future 2025 Update

The world continues to change at a rapid pace bringing new risks and challenges. Internal Audit (IA) is faced with a paradigm shift that requires adaptability and innovation to remain a value-added function for organizations. Internal auditors continue to play a vital role as a major line of defense in helping organizations meet the challenges faced by businesses and industries in all sectors of the economy.

Institute of Internal Auditors Vision 2035

The Institute of Internal Auditors (IIA) IIA Vision 2035 report outlines the future direction for the internal audit profession. The study emphasizes the need for a focus on adaptability, technology integration, and increased value delivery to organizations. A key element in this vision is the evolution of outsourcing options for internal audit functions, as organizations continue to seek more efficient, cost-effective, and specialized solutions.

Outsourcing and Co-sourcing Options

The need for increased initiative-taking participation from Internal Audit Functions (IAF) raises the question, “How can this be accomplished with the existing compliance focused staff?” Remember the phrase, “can’t see the forest for the trees?” This is so often true, especially in organizations where all is going well, and management and the board are comfortable with the internal audit plan and continuing to do what has always worked well. This usually works well until it does not. Many organizations can benefit from having fresh eyes on existing processes. One way is to supplement one’s current internal audit function with co-sourced talent to take a fresh look at key areas, raise awareness, and improve the skills of one’s staff.

Specialized Skills

As businesses become more complex, internal audit functions may have the need to outsource certain tasks or entire functions to experts with specialized knowledge. While the outsourcing option may get the job done, it does not raise the level of expertise of staff. Consider co-sourcing both specialized audits and current audits. This provides opportunities to raise skill levels and increase the knowledge of staff members. Current high-value activities, like strategic risk management and governance, can benefit from a fresh perspective.

Technology and Automation

The integration of advanced technologies, such as data analytics and AI, into internal audit processes has led to the development of new outsourcing options. External providers can offer innovative tools and platforms to enhance audit quality, speed, and accuracy, providing organizations with access to capabilities they may not have in-house.

Cost Efficiency

By outsourcing, organizations can lower costs related to hiring and training internal audit staff while benefiting from the expertise of external professionals. Outsourcing brings with it continued costs. Consider co-sourcing in areas where a raise in the skill level of existing staff is desired. Select a provider who considers knowledge transfer to be one of the benefits of the services they provide.

Enhanced Risk Management

Outsourcing certain audit functions can improve an organization’s ability to focus on core risks, as external providers may offer broader perspectives and specialized knowledge that enhance the overall risk management framework. Peter Drucker said, “Knowledge has to be improved, challenged, and increased constantly, or it vanishes.” Consider using the co-sourcing option with knowledge transfer to provide a long-term benefit to the IA function.

Scalability and Access to Global Talent

IIA Vision 2035 highlights that outsourcing allows companies to scale their internal audit efforts as needed, especially in response to business growth, regulatory changes, or more complex audits. Furthermore, it provides access to a global pool of talent and best practices. While this is true, typically a full outsourced solution does not provide opportunities for continuous learning on the part of internal resources. Too often, there are outsource solutions that leave a product with an organization, and no one knows how to maintain and continually improve on what was provided. Many of the large global providers do not provide knowledge transfer as part of their package; rather, they strive to create a dependency on their expertise.

Final Thoughts

The internal audit profession will continue to evolve as organizations leverage outsourcing and co-sourcing solutions to achieve greater efficiency, expertise, and technological capabilities in their audit processes. The opportunities provided by strategically using outsourcing and co-sourcing for continuous improvement of IA provides diverse and flexible options for businesses to enhance their internal audit functions.

For more information on McKonly & Asbury’s outsourcing and co-sourcing Internal Audit services with knowledge transfer, please contact Elaine Nissley.

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