To increase alignment and improve internal audit’s relevance, develop a strategy that matches the organization’s strategic plan time horizon.
Internal audit functions may have a charter and an annual plan, but many do not have a higher-level, internal audit-specific strategic plan.
A detailed strategy enables internal audit to align its objectives to the organization.
The internal audit strategy should have a three-to five-year time horizon and have a road map based on the organization’s overall strategy, stakeholder expectations, regulatory requirements and the role of the other risk functions.
Leading internal audit functions follow four steps to create a well-aligned strategy:
Develop or refine internal audit’s strategic vision
. Know the function’s roles and responsibilities, the needs of its key stakeholders, its mandate and what it should accomplish over a long-term period. Identify and prioritize key strategic initiatives
. Based on the mandate and strategic vision, align initiatives to key business risks and key operational and financial priorities. Make sure processes, methodologies and tools are up to date, internal audit has the industry and functional insights it needs, and staffing models are flexible enough to anticipate change and address emerging risks/issues. Design the appropriate key performance indicators (KPIs)
. Determine how internal audit measures its success against the prioritized initiatives, how it aligns with stakeholder expectations, and how to track productivity and value-driven measures. Develop an operating strategy
. Detail activities that enable internal audit to achieve its strategic initiatives. Determine key milestones and how the function is communicating its progress to key stakeholders. Also, put steps in place that enable internal audit to adapt to changing priorities so it can maximize its relevance to the business.
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