Audit teams must collaborate to weather economic storm, experts say
July 7, 2023
33% of organisations have incorporated auditing measures to enhance resiliency against macroeconomic uncertainty into their regular audit practices
In the midst of these challenging economic circumstances, it is imperative for boards and internal audit teams to establish a robust partnership, according to Anne Kiem OBE, CEO of the Chartered Institute of Internal Auditors (IIA) .
The growth of the UK’s economy remained at a standstill of 0.1% in the first quarter of 2023, as per the unchanged assessment made by the Office for National Statistics (ONS). The lack of growth shows inflation in the UK continues to exceed that of major international competitors, including the US (4%), Germany (6.1%), and Japan (3.5%).
A new IIA report has revealed 56% of participants perceive the risk level associated with economic uncertainty in their organisations as either high or very high.
Additionally, 73% of participants believe internal auditors are most engaged in supporting risk management and framework assessment.
This suggest internal auditors must forge a strong relationship with its organisations boards to combat these uncertain times, states Kiem.
Promoting a culture of resilience
The report states a third of organisations have incorporated auditing measures to enhance resiliency against macroeconomic uncertainty into their regular audit practices.
“Working closely together will ensure they can diligently and effectively identify, manage, and mitigate the long list of risks exacerbated by economic uncertainty.
“Greater collaboration can help ensure that the organisation is resilient enough to weather the economic storm and support greater preparedness for unforeseen economic shocks in the future,” said Kiem.
Richard Chambers, senior internal audit advisor of AuditBoard echoes this view and believes maintaining a close and collaborative relationship with the board is essential.
While internal audit functions actively participate in numerous economic resiliency measures, they are frequently undervalued as a crucial asset in assisting organisations in navigating through periods of economic uncertainty, the report learned.
“These volatile economic times mean internal audit professionals need to keep their eyes firmly focussed on what may be coming over the horizon, as well as be agile and responsive to what is a rapidly evolving macroeconomic risk environment,” Chambers stated.
The report encourages internal auditors to thoroughly examine both internal and external factors that may pose risks to the organization. This process has continually evolved within teams since the 2008 financial crisis.
[Accountancy Age]
