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I once had the unexpected opportunity to speak about the future of internal audit to a diverse group of institutions. When I asked myself (and them) what that future looked like, the easy answer was “data analytics.” After all, I am the data guy.
But easy answers rarely tell the whole story. So, instead of a self serving sales-based monologue, I found myself lost in thoughts about what auditing will look like when we’re all zipping around in self-driving cars, working three-day weeks, or perhaps even living on the moon.
While plenty of reports exist about the industry’s future, none truly resonated with me on a practical level. They were largely a load of big consultancy driven ****. They were focused on approaches not outcomes, how we would use analytics more, and continuous monitoring and the like. I wanted to know what a successful audit function would actually look like.
So, I took a step back and came up with my own perspective. Here it is.
The Essential Skills and Knowledge of the Future Auditor
When I began my career in public sector audit, it was clear even then that technology was doing much of the heavy lifting. This trend will only accelerate. As AI increasingly makes decisions, we’ll need even more IT auditors; seasoned testers, developers, analytics experts, and even quants.
These specialists will give us greater depth and insight, but they may not be natural auditors. We’ll need team members who can translate their technical findings into clear, actionable audit reports.
Attracting this talent to internal audit won’t be easy. It’s a fantastic career, but the perception isn’t always glamorous. We need to offer more than just a salary; we need to offer purpose and a compelling vision.
Efficiency: Doing More with (a Little) Less
I remember my time in the Big 4 being sent to Marbella for a week of ‘mandatory training’. The days of all-expenses-paid training jollies are long gone. We need to do more with less while maintaining morale and attracting top talent. This means finding ways to empower our teams, giving them a sense of purpose that distracts from the daily grind.
Remember, a pint won’t fit in a half-pint glass. To keep our best people, we need to offer them opportunities for growth, development, and a sense of belonging.
Influence: The Bedrock of a Successful Audit Function
The most effective audit teams are those with the influence to drive real change. This influence comes from trust, and trust is built on more than technical expertise. It’s about empathy, understanding, and the ability to navigate complex interpersonal dynamics.
Think of it like this: executive leaders have tough jobs. They need practical, timely support. As auditors, we can be immensely valuable by providing that support, building trust, and ultimately becoming an integral part of the organisations success. Or, conversely we could be a thorn in their side, distracting them from the work they need to do.
I remember my first time being the recipient of an internal audit, shortly after I had left internal audit. I was responsible at the time for a bunch of standalone, airgapped, superfast Windows 64-bit PCs for local data processing. The audit seemed to focus in on one issue, whether I should be allowed to use non-standard build PCs that had been approved on waiver, rather than worry about all the manual data processing involving USB sticks that was happening on them. Needless to say, it would have been better to come to a consensus and work together to mitigate real risks to our organisation.
Auditor Credibility & Influence 0, Wasted Management Time 1.
The Role of AI in the Future of Audit
AI has the power to enhance every aspect of the audit function, if we have the vision, ability to embrace change, take a risk, and determination to grasp it.
AI-powered risk assessment: AI can identify and prioritise risks more effectively than ever before, allowing auditors to focus their efforts where they matter most.
Continuous auditing: With AI, we can much more easily move beyond periodic audits to continuous monitoring, providing real-time assurance and enabling proactive risk management.
Enhanced efficiency: Automation can streamline routine tasks, freeing auditors to focus on more complex and strategic issues.
Data-driven insights: AI can uncover hidden patterns and anomalies in vast datasets, providing auditors with deeper insights and a better understanding of the business.
AI, or more specifically Machine Learning can be used to go beyond operational testing and actually assess how well controls are designed. I’ve been working with a couple of financial institutions to show them how they can relatively quickly and easily validate the accuracy of their probability of default models using these techniques.
This evolution marks a shift away from a purely compliance-focused approach towards a deeper understanding of underlying systems and controls. The integration of AI promises a future where audit adds significant value by proactively managing risk and driving continuous improvement.
Put simply, in the age of AI I am hoping we can move away from relying on ‘sign off’ as a catch-all key control.
A Practical Roadmap for Integrating AI into Internal Audit
Realising the benefits of AI in internal audit requires a pragmatic, step-by-step approach. The life cycle of AI adoption is largely the same for any business division, not just internal audit:
Assess your current tools, data, processes, capabilities, and document any gaps. Don’t shoot for the stars straight away, use what you have now or easily at hand.
Secure your leaderships buy-in and investment, ideally coming from the Audit Committee.
Upskill your teams through appropriate AI & analytics training. This does not mean training courses for everyone full of maths and python. Some of your team will need that, but most just need a conceptual understanding.
Implement pilot AI use cases to demonstrate value. Prioritise low effort, high reward opportunities.
Scale your new-found AI capabilities across the audit life cycle in a planned, and structured way.
While this road map outlines the necessary technical steps, getting the people element right is the toughest challenge. Auditors must develop a data-driven mindset to not just identify findings, but uncover root causes across processes.
Getting auditors to embrace innovation and change isn’t as easy as it sounds.
Perhaps most critically, successful AI integration requires committed leadership providing visible sponsorship and resources. Only with full executive buy-in, with an appetite for a few mistakes along the way, and the provision of carrots for most with the occasional stick, can internal audit teams get a true mandate to shift the dial towards a model of risk foresight.
Ultimately, AI is just an enabler. Empowering your people with the right skills, mindsets, and desire to embrace AI is the crucial piece of the jigsaw.
The Successful Audit Function of the Future: A People-First Approach
So, I came to the conclusion that the future of audit isn’t about data, or AI, it’s about people. It’s about building diverse, strong, and cohesive teams that are trusted and valued for their thought leadership, commerciality, and ability to keep the organisation on track. Besides, hire the right people and they will drive data analytics and AI use anyway.
As long as organisations continue to trade and take risks they will need internal auditors. The skills those auditors have and whether we need as many as we have today, or indeed if we need more remains to be seen. No-one can forecast the future, just like they couldn’t in the last industrial revolution. There are just too many variables.
So, I don’t really know what your audit function will look like in 10, or 20 years. But the good and successful ones will have invested in their people, and have the right skills mix to adapt to the future. The successful audit function of the future will be an integral part of the firm’s executive, and all the various sub committees and divisions by having built trust and demonstrated commercial value.
Rather perversely, I look forward to hearing about the audit function that staves off a corporate collapse by having that ‘independent view of risk’, the function that can confidently articulate the contrarian view, and be trusted enough by the senior executives so that they are listened to.
So how do you start building trust and demonstrate commercial value to become the successful audit function of the future?
Producing compelling audit reports and being valued by our stakeholders sounds simple, but can be very difficult to achieve in practice. We all know as auditors that the best way to land issues credibly is with cold hard factual observations. People act much more quickly and decisively on facts and data that they can understand, rather than subjective opinion.
That’s where data analytics and AI comes into its own.
Jamie is Founder at Bloch.ai, and a Visiting Fellow in Enterprise AI at Manchester Metropolitan University. He prefers cheese toasties.
Follow Jamie here and on LinkedIn: Jamie Crossman-Smith | LinkedIn
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