Irish internal audit functions have the opportunity to provide greater value to their businesses.

PwC’s latest survey of over 4,600 internal audit leaders, Board members and other business leaders in 81 countries including in Ireland reveals that internal audit functions in Ireland can add greater value to the business while improving the effectiveness of risk management.  

Just 26% say their internal audit team is very effective at raising significant risks 

Just 26% of Irish respondents said that their internal audit team is ‘very effective’ at raising significant risks and challenges that the business had not yet considered, significantly below global peers (49%).

Aspiring to become a trusted advisor

Just 15% of Irish respondents stated that their internal audit department is currently seen as a ‘trusted advisor’. At the same time, over half (54%) would like their internal audit department to be a ‘trusted advisor’ in three years’ time. The survey highlights that certain activities could benefit from greater internal audit involvement such as risk monitoring and assessment, governance and business wide risk management. The survey found that less than one in ten (8%) Irish executives ranked strategic and creative thinking, flexibility and agility, as key strengths of internal audit, versus 19% globally.

Speaking at the survey launch, Andy Banks, Internal Audit Leader, PwC Ireland, said: “Irish business leaders know what they want from their internal audit functions and understand the benefits from greater internal audit involvement. Their views are aligned to those of many internal audit functions who want to be strategic and trusted advisors to their stakeholders. This is achievable, however, there are some critical hurdles to be overcome in terms of technology, skills and innovation to enable improved effectiveness by internal audit functions in Ireland. Global peers in many cases are more advanced.”

Greater investment in technology needed - to keep up with global peers

The survey highlights a need for greater use of technology and innovation, with global peers being significantly more advanced. Less than a quarter (23%) of Irish respondents admitted that their internal audit function uses data analytics to optimise audit delivery (Global: 46%). Similarly, less than one in five (18%) confirmed that their internal audit department uses technology and data analytics to a great extent to increase the efficiency and effectiveness in a variety of areas (Global: 42%).

Just 21% said that their internal audit function demonstrates innovation in reporting (Global: 41%); just 5% lead the discussion on digital transformation (Global: 38%) and just 2% generate new business ideas (Global: 35%).

Ireland also lags global peers when it comes to investing in specialist auditing and monitoring tools (Ireland: 21%; Global: 36%) and robotic process automation (Ireland: 18%; Global: 37%). 

It is not surprising, therefore, that when it comes to technological and data capabilities, that internal audit departments in Ireland are more likely to avail of the services of external providers over the next three years (Ireland: 46%; Global: 29%).   

Significant investment in technology is planned in the next three years  

The survey highlights that Irish firms intend to increase the pace of investment in technology in the future. For example, key investments in the next three years include: data analytics (Ireland: 62%; Global: 41%), team training and upskilling (Ireland: 59%; Global: 45%) and data visualisation (Ireland: 41%; Global: 38%). 

Where investment in technology took place, the return was poor  

Where investment in technology took place in the last 12 months, the survey reveals that internal audit achieved a poor return on this investment.   For example, just 15% said that their reporting was more efficient and impactful following investment (Global: 22%), just 13% said that they were able to provide greater insight (Global: 23%) and only 10% achieved improved risk coverage (Global: 22%). 

The strongest attributes won’t be enough for the future

Respondents scored the strongest attributes of their internal audit departments to be: a risk and controls mindset, independence and objectivity and professional skepticism. But the most important attributes, according to the survey, are technological capabilities, transformation and business change experience and data analytic skills. 

Lack of talent a key barrier 

Unable to recruit and retain the right talent is a key barrier preventing their internal audit departments achieving their desired goals (Ireland: 51%; Global: 28%). Other key barriers include:  lack of internal audit resources, skills and expertise (Ireland: 46%; Global: 33%), insufficient budget (Ireland: 31%; Global: 30%) and limitations in technology and data capabilities (Ireland: 28%; Global: 30%).

Less than four out of ten (38%) Irish respondents are very confident that they currently have the right talent and skills required in their internal audit department to address the needs of their organisation in the next 3-5 years (Global: 45%). Only one in three (33%) are confident that they will be able to attract and retain new talent to address the needs of their organisation in the next 3-5 years (Global: 47%). 

Key barriers to attracting and retaining the right talent include: overall scarcity in the market (Ireland: 59%; Global: 40%); competition from other organisations (Ireland: 44%; Global: 34%) and compensation, incentives and benefits (Ireland: 28%; Global: 33%).

Andy Banks concluded: “The survey highlights the considerable opportunity for internal audit functions to invest in the right set of technology capabilities and skills in order to become trusted advisors and to bring real value to the business and improve risk management.”

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