Audit With Acumen: Internal audit can incorporate elements of the Balanced Scorecard approach to build its ability to anticipate and meet the organization's needs.

Author:Orsini, Basil

Board and management stakeholders want internal audit to demonstrate greater business acumen. They want auditors to have a broad understanding of the organization, as well as anticipate how to help the organization achieve its objectives.

That means auditors need to see beyond their area of expertise and responsibility. They must be agile to act proactively and congruently with the organization's way of doing business. By recognizing these expectations, internal audit can show that the department is an excellent place to develop business acumen.


Organizations expect all senior managers to have the business acumen to lead their areas of responsibility and support broader organizational success. Managers should be able to anticipate and act on ways to add value to the organization and its stakeholders.

Likewise, internal audit needs to identify the best ways for the function to develop business acumen that fits the organization's needs. It can't take a one-size-fits-all approach, though, because business acumen will vary by industry, type of business, and the kind of service a business unit provides. For example, internal audit will require different aspects of business acumen than business lines, such as sales and production, or support services such as finance and security.

Moreover, internal audit's assurance role in relation to other assurance roles within the organization impacts the kind of business acumen it needs. Developing business acumen can enhance internal audit's risk-based coverage of the organization's main lines of business, as well as the first two lines of defense.

In developing business acumen, internal audit should not be seen as narrowly focused rule-followers who avoid innovation and taking risks. Chief audit executives (CAEs) should ensure the audit staff understands the capabilities of the organization's first two lines of assurance, as well as the business' main products and services. Their strategy for establishing business acumen should involve human resource activities, such as hiring, promotions, and career planning, as well as professional development activities.


Internal audit's use of business acumen must reinforce, and not compromise, auditors' professional competence. The International Standards for the Professional Practice of Internal Auditing place great importance on risk-based planning--multiyear, annual, and engagement-to ensure that services are strategic...

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