Internal auditors in the financial services sector have seen their role and responsibilities strengthened in the past year, according to a report by the Chartered Institute of Internal Auditors (IIA).
One year after the launch of its Financial Services Code Effective Internal Audit in the Financial Services Sector (the Code) the IIA released a report, entitled Building Effective Internal Audit: Putting the Pieces Together, looking at examples of good practice on various aspects of the Code.
The recent report revealed that as regulators focus more and more on the management of risk, internal auditors are seeing their sphere of influence increase in strategic events such as product launches, major investments and M&A.
According to the report, increasingly internal auditors are consulted earlier in the process of those strategic events in order to challenge or provide assurance on how risks are managed in key transactions before they are made.
IIA chief executive Ian Peters said : "As M&A activity picks up after the recession, internal auditors are making an essential contribution to success by helping to stress-test decisions, and ensuring that risks posed by major corporate events are being properly addressed and managed."
The report also suggested that internal auditors are moving away from a cycle-based approach to a risk-based approach, meaning that they focus more on outcomes rather than processes.
Consequently, according to Peters, internal auditors are "better positioned to focus on the bigger picture, taking a more active role in advising on strategic business activity, rather than getting lost in the weeds".
While the IIA code and report were specifically dedicated to the financial sector, Peters hoped that it would inspire other sectors of activity.
"The financial sector is not the only one to suffer from major scandals in recent years, and the good practices being introduced as a result of the IIA’s Code can help strengthen governance and risk management elsewhere, such as in the public sector, health, manufacturing and retail," he concluded.
"Many of the lessons learned and the good practice currently being developed in financial services […] will be equally applicable and valuable in a general business context."