Asian executives dissatisfied with internal audit functions

Talent gap is amongst the challenges that the internal audit team faces.

A significant gap between the expectations of Asian business executives and the performance of internal audit teams was seen, resulting in the growing dissatisfaction among executives with its functions.

According to Murali Samy, Audit Partner at Deloitte PLT, executives are opening doors to internal audit teams to address significant risks and strategic areas. However, they are not so satisfied with the functions that have been carried out by the internal audit team.

He said that this sentiment reflects a critical phase where internal audit functions are expected to evolve to meet the increasing complexity and higher stakes of modern business environments.

Samy identified several challenges hindering the expansion of internal audit teams beyond traditional finance competencies. Firstly, disparate systems in organizations lead to inefficient data management.

He explained that data is often stored in silos and not appropriately tagged or standardized, causing internal audit teams to spend excessive time compiling and sanitizing data instead of analyzing it.

“This actually waste your time where they actually should be. At that stage, they should be analyzing the data, but instead of that, they are actually compiling and trying to sanitize the data type,” he said.

Another significant challenge is the talent gap. There is a noticeable deficiency in talents who can connect the dots to identify significant risks, particularly in emerging areas like cybersecurity, sustainability, and ESG (Environmental, Social, and Governance).

In addition, the increasing complexity of regulatory frameworks requires audit teams to remain updated while maintaining independence, adding another layer of difficulty.

“If you look at the situation now, the regulations has been becoming more complex. And the internal audit teams need to remain, keep themselves updated, but at the same time, remain independent,” he said.

To address these challenges, Samy emphasized the need for specific skill sets and technological tools, saying that data mining and analytical skills are paramount.

"The team needs to be able to draw out data and analyze it with an inquisitive mind, eager to unravel the secrets behind it," he stated, adding that understanding the business and industry is crucial to identifying significant risks and providing value-added inputs.

Furthermore, Samy mentioned that appropriate IT skills are essential for leveraging tools like Power BI for data analysis and identifying unusual patterns in an entity as these skills enable internal audit teams to focus on areas that require attention, thereby enhancing their effectiveness and aligning with executive expectations.