Harnessing Technology With Intelligence for Internal Auditors – Part 1

Harnessing Technology With Intelligence for Internal Auditors – Part 1

This article originally appeared on the Chartered IIA Technical Blog.

Mark Twain famously quipped that rumours of his death had been “greatly exaggerated.” Similarly, predictions about the obliteration of internal auditing by technology have circulated since the advent of spreadsheets but have yet to come to pass.

Technology often inspires suspicion, and artificial intelligence (AI) has commanded public attention and sparked resistance. Just recently:

  • GCHQ warned ministers of the dangers of AI, urging careful regulation.
  • The Department for Science, Innovation, and Technology released a white paper proposing a regulatory framework to curb AI.
  • Technology experts – including Steve Wozniak and Elon Musk — called for a halt to “out-of-control” AI development.

Should we view artificial intelligence with existential dread? A recent study found internal auditors among those most “at risk” from large language models (LLMs) like ChatGPT, but many similar reports see it as one profession potentially “most impacted” — not necessarily detrimental.

This two-part blog looks at technology (not just AI) as an instrument that enhances internal auditing capabilities. In part 1 below, we delve into our sometimes turbulent relationship with technology. In part 2, “Building Better Internal Audit Services Through Analytics, Process Mining, AI, and More,” we explore some practical applications — from spreadsheets to cognitive analytics.

For those who are late adopters of technology, our message is “come on in — the water’s lovely!”

2024 Focus on the Future Report

The Importance of Continuous Innovation

Alex had an early lightbulb moment on his very first engagement. The lead auditor, with a stack of invoices and a ruler, removed a document every half-centimeter to create a sample for the team to scrutinise for errors and potential fraud for the subsequent fortnight. This is akin to searching for a needle in a haystack by inspecting 20 random straws of hay.

However, within three days, Alex processed the data in an audit analytics tool and identified every potential anomaly. Now, the team could focus on investigating those parts of the haystack most likely to contain needles.

When quizzed about his sample methodology, the lead auditor gave Alex two reasons:

  • That’s how we’ve always done it.
  • It’s a randomised but repeatable process — “someone else can take my magic ruler and get the same results.”

For agents of change, the first answer is unacceptable. The second, however, reveals a critical point: Here was the systematic application of a fundamental approach that was once innovative — if only it hadn’t become frozen in time. We must begin with simple steps, but never cease striving for better.

If, like the great white shark, we keep swimming forward, we will continue to prosper. We confidently predict that AI will not replace internal auditors. However, technology-enabled auditors will replace those relying on magic rulers.

Let Technology Shoulder the Burden

Technology augments our capabilities rather than replaces us. It is, as Richard Chambers says, a capacity multiplier completing high-volume, repetitive, and arduous tasks more quickly and accurately than we could with our bare hands and unassisted brains. Our job as auditors is to provide insight, foresight, and advice for making organisations better. Let technology do the heavy lifting.

Consider the autopilot: It navigates the airplane in routine situations while humans plot coordinates, monitor readouts, and assess conditions. For more difficult manoeuvres, the pilot assumes control. Remember, Captain Sully overrode the autopilot to land safely on the Hudson.

Debunking Common Misconceptions

Surveys show auditors to be slow technology adopters — but we have plenty of excuses.

“Change is hard.”

Agreed, but “we’ve always done it that way” is truly the path to obsolescence. Fortunately, two-thirds of internal audit functions have recently increased their focus on innovation and transformation. As champions of improvement, we must lead by example. To earn our seat at the table as trusted advisers, we must optimise the value we deliver. Using the best tools available is a no-brainer.

“We lack the necessary skills.”

Being unable to recruit and retain high-tech talent for our low-tech audit departments is no surprise. Young auditors are tech natives with high expectations. Besides, the entry point skill set for digital transformation is probably lower than you think. With an abundance of user-friendly apps and self-service out-of-the-box software, technology has been democratised.

“We don’t have the time.”

Digital transformation is continuous and can occur through evolution rather than revolution. In fact, our recommendation is to start small, fail fast, and learn to walk before you run. As Lao Tzu might have said, the digital journey of a thousand apps begins with a single click.

“We don’t have the budget.”

Licenses, hardware, talent, and training undoubtedly cost money, but they are investments with real returns.

Another revelation for Alex came after auditing the accounts payable process for the U.K. entity of one of his clients. The auditee was astounded: The team provided so many valuable insights through high-volume data analytics and presented findings as a customised interactive dashboard. This became a component of the final audit report and was entrusted to the auditee for tracking the findings. Six months later, the same audit team was excitedly preparing for an identical audit in Brazil — serendipitously aligning with the 2014 World Cup in Rio. However, it quickly became apparent that most of the existing analytics could be re-used as the Brazilian entity was using the same ERP system as the U.K. The audit team changed their approach and leveraged data analytics to support the planning and risk assessment activities. When the analysis returned up a completely clean bill of health, there was no need to conduct the audit anymore, saving on significant costs and time — and dashing Alex’s hopes of enjoying some football.

Technology delivers greater value by stimulating greater improvements and efficiency gains and reducing the costs of audit delivery.

“We don’t have support from the board.”

You may not think you have support, but you probably do. Protiviti’s Next-Generation Internal Audit Survey found that 84% of board members fully support internal audit’s investment in technology. If anything, senior leadership expects audit functions to keep up the pace with innovation activities that are happening in the rest of the organisation.

“We must remain independent.”

Internal auditing’s involvement in continuous monitoring, data warehousing, and data governance forums is fully compatible with its organisational position. As the Three Lines Model says, independence does not imply isolation.

“We don’t know where to start.”

We understand that many audit leaders have good intentions but feel like they already missed the start of the race. If you’re wondering, “Where should we begin?” be sure to read the upcoming second article in this series.

As you can see technology is an asset to internal auditors – a friend not a foe! Read part two, “Building Better Internal Audit Services Through Analytics, Process Mining, AI, and More,” where we delve into some practical examples.


Al Mawji, CMIIA, is a Senior Director, Partnerships UK&I at AuditBoard. An experienced audit and risk professional with over 20 years of experience, Al spent the last 10 years as a Chief Internal Auditor at Brookfield Asset Management in New York. Connect with Al on LinkedIn.


Alex Psarras is an Associate Director in Internal Audit and Financial Advisory at Protiviti. Since 2010, he has been working closely with clients to align internal audit and GRC functions with their objectives, helping them bridge the gap between risk, data, and technology. Connect with Alex on LinkedIn.