WHAT SEPARATES THE BEST INTERNAL AUDIT functions from the rest? An alignment with business objectives, a defined role, and well-managed relationships with stakeholders, according to a study of 100 internal audit organizations in global companies by the Aberdeen Group, a Boston-based research firm.
Top performers tend to be more mature audit functions than their peers, Aberdeen reports in its Beyond Demonstrating Compliance study. They are smaller in size and highly proficient. For 2009, best-in-class internal audit functions delivered audit reports 7 percent faster than a year ago and completed audits with 5 percent less cost, while other audit groups took longer to report findings for increasingly more expensive audits.
Nearly three-fourths of top-performing internal audit functions regularly evaluate audit plans for alignment with business objectives and risks, Aberdeen reports. Fifty-eight percent have defined the department's mission within the organization's governance, risk, and compliance framework. Seventy-three percent effectively manage relationships with key stakeholders, and 64 percent have a standardized method of identifying and prioritizing risks.
All of these are characteristics of internal audit departments profiled in Protiviti's Internal Audit Around the World report. For example, the internal audit department at Indonesia-based Bank Mandiri in 2007 initiated a three-year plan to align its activities with strategic changes unfolding at the bank. The department reorganized its structure to coincide with strategic business units that were being established throughout the...