The Importance of Working with Internal Audit

(Business Finance, 23 January 2012)

In Brief: In recent years, the role of the internal auditor has evolved; internal auditors now work more closely with business units and are striving to provide the company with greater foresight and insight by increasing their use of analytics, instead of solely providing the more traditional retrospective analyses. This article argues that finance leaders should be receptive to working with internal auditors because they can learn valuable lessons on why controls fail and how to circumvent control issues.

Our View: Most companies struggle to determine the adequate number of controls for effective compliance, overinvesting in key controls and associated documentation to meet a perceived needed coverage of the risk universe. We advise the Controllers in our network to work with Internal Audit and other stakeholders to use a risk-based method to define the reasonable scope of key and non-key controls. Adopt measures to reduce and consolidate controls into direct entity-level controls, and leverage technology solutions to accelerate documentation and testing.