The majority of internal audit departments consume an overwhelming percentage of their plan by doing traditional internal audits – what are known as “safeguards operations” and are the focus of internal audit, and are also the activity where most audit committees are expected to emphasis. However, many internal audit departments, either individually or through outsourcing to consulting firms, support some level of consulting work and aspire to do more.
As a result, the respective departments will have to develop procedures for analyzing advisory commitments and identifying the risk to their independence and objectivity.During the pandemic crisis, some internal control functions have been duplicated to achieve the control plan, while others have shifted a large proportion of their efforts to consulting work that is not part of the control plan, as business needs and risks evolved rapid pace and internal control staff had the necessary skills to further assist the organization or company in a crisis situation.
The respective executives are concerned about how to allocate the limited resources between these two activities, as safeguards are the mainstay, but consulting is more likely to add immediate tangible value, improve relationships and enhance its profile. internal control in the organization.
This often involves better management of the data in an organization, so that conclusions can be drawn and trends can be analyzed that can help to formulate the most appropriate business strategy. It is important to mention that the internal auditors are among the few without bodies with transversal knowledge of the organization in which they work, for this reason and many of the large organizations start their management fast track programs with tenure of executives in the respective departments.
In other words, the consulting projects are the ones that usually have greater visibility and make the difference, especially taking into account the independence of the specific departments, which increase the chances that the final result will aim at the improvement of the organism alone.
It is clear that the concepts of independence and objectivity are very often key concerns when it comes to counseling obligations. According to the standards of the Institute of Internal Auditors (IIA), it is absolutely permissible to carry out this type of commitment, provided that it is notified in the internal audit charter.
It should be noted here that the auditor’s ability to engage in consulting activities without prejudice to his or her independence depends to some extent on the distinction he or she makes between providing assistance or taking on an advisory role versus an execution role, which is formally and practically responsible for management of an organization.
The current reality and need for a future approach show that organizations need to be more flexible to stay relevant. Consulting commitments will be clearly in greater demand from internal audit services. For organizations thinking of a transformation, such as adopting more computerized, automated and secure processes, internal control can prove to be an important ally in this process.