Like many chief audit executives, when I was leading an internal audit function, I periodically found my company facing financial pressures. Inevitably, management and/or the board would ask the question “can internal audit’s resources be reduced as part of corporate cost cutting?” Whenever that happened, I used the occasion as a call to action to do two things: (1) redouble my efforts to communicate the value we bring to the organization, and (2) examine the efficiency and effectiveness of the internal audit operation itself.

The second initiative was important, because if reductions in resources were to be levied, I needed to mitigate the impact on the value we delivered by ensuring we were as efficient as we would expect to find other operating units in the organization.

The longer that I led internal audit departments, the more that I came to realize that efficiency reviews of internal audit shouldn’t wait until the chief financial officer is knocking at the door with pink slips to hand out. Instead, we should maintain a continuous focus on our processes and procedures. There is comfort in having a deep understanding and trust in processes that have been used and perfected over the years. These tried-and-true processes and techniques are taught to new practitioners and offer valuable benchmarks for comparing performance over time. But reliance on this kind of thinking leads us to the punchline of a meme.

Q: How many internal auditors does it take to change a light bulb?

A: It depends. How many did it take last year?

In a dynamic business atmosphere where risks emerge and mature at lightning speed, we as a profession cannot afford this meme mentality. For many internal audit teams, something has to change!

Much has been written in recent years about “Agile Auditing.” My friend Toby DeRoche is one of the foremost experts on the subject, and he defines agile auditing as “… an iterative approach to developing and executing audits, based on a shorter audit lifecycle from assessment to reporting, which focuses on gaining and sharing insights with management related to the most urgent risks in an organization…Agile auditing focuses on the risks that matter most to management right now.” Toby has written an excellent book on agile auditing for those who want to learn more. But I content that internal audit departments do not have to formally blow up and rebuild their service delivery model to become dramatically more efficient. An agile mindset is every bit as important as an agile model.

While we should never abandon the fundamentals of engagement planning, fieldwork, assessment, and reporting, we must embrace agility by working faster and smarter, which includes expanding our use of data analytics and carefully weighing and leveraging new technologies like robotics process automation and AI.

In my book, The Speed of Risk, I dedicate three chapters to providing advice on streamlining processes to generate more timely reports and greater internal audit productivity. In another chapter, I stress the importance of innovation in internal audit.

The best CAEs develop a mind-set where process review and improvement is ongoing. They also are willing to accept an occasional failure if those failures provide new insights. I devote a chapter to open-mindedness in my second book, Trusted Advisors: Key Attributes of Outstanding Internal Auditors. It examines the concept of “productive failure” and other aspects of open-mindedness that nurture process review and improvement.

Getting started​ is not as difficult as it may seem. CAEs can begin by focusing on three areas: understanding the organization’s needs, analyzing staff makeup, and recognizing the impact of technological changes in the particular industry in which they work.

Each organization presents a unique platform for internal auditors to practice their profession. Boards and management set a tone at the top influenced by economic conditions, the regulatory landscape, competition, risk appetite, and more. All this influences not just the details of an annual audit plan but also how internal audit does its work.

For example, organizations that operate in rapidly evolving tech industries are best served by an aggressive business stance, which requires the internal audit function to be nimble and flexible. This means internal auditors in such organizations are more likely to rely on processes that are lean and effective. Strategic use of data analytics, continuous monitoring, and new technologies, as well as strong working relationships with chief information security officers and chief security officers, will position such internal audit functions to adapt their processes as necessary.

The makeup of internal audit staffs also affects a function’s ability to develop new procedures. As risks evolve and demands on internal audit functions change, having the right people on board is essential.

Internal auditors often are saddled with the unfair stereotype of being rigid and inflexible. While I have met some in my almost 50 years in the profession who fit that mold, most do not. Having a staff that is open to change, applies critical thinking throughout engagements, and embraces opportunities to evaluate and adopt new processes and techniques positions internal audit to add value to the organization.

Next-generation internal auditors are those most likely to embrace new technologies and bring fresh approaches to addressing old problems. Adding qualified, freshly-minted talent to our staffs and encouraging creativity in engagement planning can be a catalyst for refreshing our processes.

Finally, CAEs must develop a keen understanding of how technology impacts their organizations, and how that influences risks, risk mitigation, and the internal audit plan.

There is little debate that technology offers significant opportunities to improve internal audit processes. For example, the advent of computers fundamentally reshaped how internal audits are performed, drastically reducing the use of sampling and improving our abilities to monitor organizational interactions and transactions continuously.

It is hard to overstate the importance of this technological advancement to the profession. It eliminated countless hours of tedious records reviews, improved the accuracy of our work, and provided internal audit functions the time and resources to expand their scope of services to the organization. New AI solutions are promising even more of the same. Talk about adding value.

Of course, most CAEs understand the potential downside of technological advancements. With the constant risk of cyberattacks being the new normal in business, every new technology designed to improve efficiency and productivity can potentially increase the organization’s vulnerability to a successful cyberattack or data breach. But this too can spur improvements to our processes. Internal audit must embrace new techniques and processes to quickly assess the benefits and risks associated with the adoption of new technologies.

Admittedly, the challenge of changing the way we conduct business is daunting, but this should not stop us from trying. The stakes are simply too high if we don’t.

What are your thoughts? Please share with me on LinkedIn or Twitter, or drop me an email at blogs@richardchambers.com.