A new era for internal audit. Are you ready?

The internal audit profession is undergoing a significant transformation, starting January 9, 2025, the Global Internal Audit Standards, will replace the 2017 International Professional Practices Framework (IPPF), introducing a modernised and principles-based approach to auditing. The new standards guide the global practice of internal auditing and serve as a basis for evaluating and elevating the quality of the internal audit functions. To claim compliance with these standards and mention so in your reports, they must be adopted immediately. Designed to address the evolving complexities of governance, risk, compliance, and technology, they mark a defining moment for the profession. Here’s an overview of the key features, differences from the IPPF, and practical steps to help internal audit functions transition successfully. Key features The new standards are organised into a structured framework comprising 5 Domains, 15 Principles, and 52 Standards. This new design ensures clarity, consistency, and adaptability across different industries and organisations. The five Domains Purpose of internal auditing: Reinforces the mission to enhance and protect organizational value. Ethics and professionalism: Reaffirms adherence to principles such as integrity, objectivity, confidentiality, and competence. Governance: Provides clear guidance for effective collaboration between the Chief Audit Executive, the Board, and senior management. Risk-based planning and performance: Centers audit activities around dynamic and evolving risk assessments. Communication and quality: Stresses the importance of transparent reporting, effective communication, and a commitment to continuous improvement. The 15 Principles These foundational principles guide internal auditors in maintaining professionalism, building trust with stakeholders, and delivering value through risk-based and objective assurance. The 52 Standards These detailed standards cover the full lifecycle of internal auditing, from planning and execution to reporting, follow-up, and quality assurance. They provide the specificity needed to ensure consistent implementation across various industries. Additional features Topical guidance: Addresses specialized areas such as cybersecurity, ESG, and data privacy. Technology integration: Encourages leveraging data analytics, AI, and other tools to enhance audit effectiveness. Essential conditions: Mandates active support from Boards and senior management, backed by documented evidence. Public sector guidance: Acknowledges the unique challenges faced by public sector entities. Key differences from the 2017 IPPF Streamlined framework: Simplified for easier understanding and implementation. Strategic focus: CAEs must develop a formalized internal audit strategy aligned with organizational objectives. Formalised communication: Clear protocols for transparency and accountability are now required. Technology integration: Greater emphasis on using technology and data analytics to provide deeper insights and improve efficiency. Enhanced leadership engagement: Boards and senior management must demonstrate active support and engagement with internal audit functions. Practical steps for internal audit functions Understand the framework Study the five domains, 15 principles, and 52 standards. Utilize resources like webinars and the Conformance Readiness Assessment Tool provided by The Institute of Internal Auditors (IIA). Conduct a gap analysis Compare current practices with the new standards to identify areas for improvement, focusing on risk-based planning, communication protocols, and technology adoption. Develop or formalise your internal audit strategy Work with stakeholders to align your strategy with organizational objectives. Ensure progress is documented and reviewed periodically by the Board. Embrace technology Invest in tools for data analysis, risk assessment, and audit reporting. Provide training to your team on effectively utilizing these tools. Enhance communication and reporting Establish structured communication protocols to ensure stakeholders receive timely and actionable audit insights. Foster continuous improvement Incorporate regular quality assessments and lessons learned to align with evolving standards. What it means The new standards offer CAEs a unique opportunity to reposition internal audit as a strategic partner within their organizations. By adopting a principles-based approach, leveraging technology, and fostering collaboration, CAEs can enhance the relevance and value of internal audit. Strong leadership within the internal audit function will be critical. CAEs must champion these changes, guide their teams through the transition, and ensure alignment with the new standards. Board Audit Committees should note that “There are many strong internal audit functions with weak Board Audit Committees, but no strong Board Audit Committees with weak internal audit functions.” This underscores the interdependence between effective governance and robust internal auditing. A Call to action The shift from the 2017 IPPF to the Global Internal Audit Standards represents more than an update; it redefines professionalism in internal auditing. By embracing these changes, internal audit functions can foster trust, create value, and reinforce their role as indispensable partners in governance and risk management. The challenge is clear: Will your internal audit function lead the way? Take action now to align with the standards and prepare your team for this new era of excellence. This article is based on publicly available resources from The Institute of Internal Auditors and is intended to provide practical guidance. The author is the CEO of Global Institute of Governance & Sustainability (GIGS) Ltd.

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A new era for internal audit. Are you ready?