Raising the game: the AC-internal audit relationship

CLEARLY, audit committees (ACs) are shouldering heavier responsibilities than ever before, all while juggling the disparate expectations of shareholders, regulators and other stakeholders.

In this context, ACs need to maximise the value they get from existing and limited resources. The internal audit function is one such resource and here, especially, stakeholders' expectations of efficiency and effective delivery are high.

Indeed, many internal audit functions, properly implemented, provide value across a spectrum of delivery approaches which include being an assurance provider, problem solver, insight generator and, ultimately, a trusted adviser.

The problem is this: recent research by PwC suggests that internal audit's credibility as the organisation's watchdog is generally declining. Only half of AC members and about one-third of management rate internal audit's performance as strong. While AC members see more value in internal audit than management, many AC members do not consider their internal audit function to be strong enough in critical performance areas such as promoting quality improvements and innovation, use…