- As our organisations navigate their paths to excellence, the internal audit function will undoubtedly play an increasingly significant role.
- All internal auditors must be ready to step up to this challenge and our organisations must be willing to unlock the full potential of internal audits.
Image: CHARLENE MALWA
The role of internal audit within Kenyan organisations has undergone dramatic changes in the recent years. Today, internal audit activities are considered as tools for value addition in form of assurer, assessor and adviser. An optimally managed internal audit function can prove to be the best tool for designing key strategies and making pragmatic business decisions.
Amid the constantly evolving business landscape, organisations are on a relentless quest to outperform their competition and secure sustainable growth. To do so they must make strategic decisions, manage risks effectively and constantly improve their internal processes. One ally in this mission but which is often underestimated, is the internal audit function.
Far from being just a regulatory requirement or a necessary ‘evil’, internal audit functions can play a vital role as a strategic business partner by aiding organisations in achieving excellence.
Traditionally, the internal audit function has been associated with reviewing financial statements, ensuring regulatory compliance and testing internal controls. However, the contemporary business environment demands more from internal audits. In addition to safeguarding assets and ensuring compliance, internal audits are now expected to provide strategic insights and foresights, advisory services and contribute to value creation.
The International Professional Practices Framework from the Institute of Internal Auditors says that the role of internal audits should extend beyond assurance services to include consulting services. By doing so, internal audits transform from a ‘policing’ function into being a strategic business partner.
In today’s risk-ridden business environment, the role of internal audits in risk management is pivotal. As a strategic partner, internal audits not only identify and assess risks but also align them with strategic objectives. By providing insights into how risks could impact the corporate strategy, they enable our organisations to manage risk proactively and make better strategic decisions.
As part of their engagements, internal auditors also delve into the depth of business processes by identifying bottlenecks, inefficiencies and areas in need of improvement.
By recommending measures to streamline processes, reduce waste and improve productivity, internal audits contribute directly to operational efficiency and performance. With their cross-functional view of the organisation’s processes, internal auditors have a unique perspective on how different parts of the organisation function and interrelate.
They use this vantage point to provide insights that can inform strategy formulation and execution, making them invaluable strategic partners. Internal audits also help create a robust governance framework for decision-making, oversight and accountability by assessing and improving governance structures and ensuring effective controls are in place.
As a strategic business partners, internal audits bring a unique blend of capabilities by providing assurance, offering valuable insights and foresights, promoting operational efficiency and enhancing governance. However, the transition process to a “strategic business partner” does not happen overnight. It requires that internal audit functions shift their mindset, engage skilled personnel, gain top management support and ensure effective communication amongst all its stakeholders.
As organisations navigate their paths to excellence, the internal audit function will undoubtedly play an increasingly significant role. All internal auditors must be ready to step up to this challenge and our organisations must be willing to unlock the full potential of internal audits.
The writer is the internal audit and risk manager, KenGen