There is no question that internal audit has been on a journey. And whilst there have been significant improvements to the work auditing teams have delivered over the last couple of years – largely driven by new regulations – there is still a way to go.

For those in the financial services sector it is also a much-publicised time of fast-paced, significant change, which is leading to increased focus on the area of data analytics and specifically, identifying where greater insight can potentially be gained.

This change is also impacting on the role the audit team plays on project assurance, with it becoming ever more important, and it's these two topics I wish to explore further. 

Data Analytics:

New guidance was issued by the Chartered Institute for Accounting & Auditing in 2013 to ensure the voice of the audit team was heard at board level. To have greater impact and weight, it's important that the team can deliver greater insight.

Data analytics enables this, allowing audit teams to use data assets to identify failures in a project's controls and unidentified risks. Teams are now beginning to move away from simply looking back at what happened to become more exploratory in approach. Considering why it happened, what can be learnt and – most importantly in some cases - what needs to be implemented to ensure it doesn't happen again.

Whilst the topic of data analytics is not new, many companies are still not utilising data to its full potential. Through a benchmark survey we conducted at Deloitte, we assessed the maturity of a number of companies' data analytics strategies. We found that most businesses are still in the initial or developing stage of how they use analytics when auditing, and are in most part a couple years away from when the role it plays is more defined.

Unfortunately whilst this situation progresses at a relatively slow pace audit teams are under increasing pressure from audit committees, regulators and in some cases their own project teams. Therefore I believe that where possible companies need to prioritise and invest in data analytics. For those not sure where to start I would advise they look at what their peers are doing, and even their competitors and clients, so they can consider what of those programmes might best fit their own organisation.

 Project Assurance:

The implementation of regulations such as the Senior Management Regime, which aims to introduce more accountability for individual actions, is impacting on the speed of change within the financial services industry; but so is strategic change, where organisations are completely evolving their business models or IT systems.

This rate of change means the audit team's role is increasingly important and in its own way, also evolving. Previously it was brought in to evaluate the project post-close, but it's clear that this can be too late. Audit teams need to push to provide project assurance from the start, so that they can prevent, manage and mitigate risks in the change portfolio. This will not only help with improved delivery time, but also ensure projects are kept on budget.

Given the level of change many companies are going through, it may not be possible for audit teams to provide assurance on all projects however which is why it's important to focus on identifying and managing risks, and prioritising and tailoring the assurance approach in line with risks. It's important that once these risks have been identified that they are raised quickly to help meet the project goals, and to maintain efficiency of reporting and real-time escalation.

What's clear is that the industry will continue to evolve, perhaps at a quicker rate than it has done historically, and now is the time for companies to ensure they are in the best position possible for future strength. I believe that those firms who bring audit teams on to projects at the start will quickly see the positive impact of that decision and be best placed for future, sustained success.

If anyone would like to talk to me in more detail about these changes in internal audit, or find out more about the events that we run at Deloitte to support our clients in these areas, please do contact me.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.