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Internal audit faces a critical decade ahead

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2 years ago

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Earlier this summer I had the pleasure of presenting The IIA Internal Audit Foundation’s newly released Vision 2035 project alongside our newly appointed chair of the Global Board of Directors, Terry Grafenstine, to an audience of more than 2,100 practitioners and thought leaders at our International Conference. Standing on the stage, I reflected on the sheer opportunity we have in front of us as a profession and the hundreds of thousands of internal audit practitioners across the globe with the talent and the motivation needed to seize the moment. The conversations I’ve had with members and stakeholders since we shared our findings have inspired even more confidence in the collective strength of our profession and optimism in our ability to move quickly in the face of unprecedented change. 

However, I also want to be clear that if we remain complacent — if we believe that business as usual is good enough — there is a very clear risk that the profession will be rendered irrelevant by 2035. I don’t believe that is a likely outcome, but it is well within the range of possibility. The good news is that our future is firmly in our own, steady hands.

Picking up the pace on technology adoption

Many of the discussions I’ve had over the past month center around technology. Our members have heard us explaining how critical emerging technologies will be to our future — a fact that is underscored in the Vision research. However, we are not doing enough collectively to spur rapid adoption. We must refocus our efforts from the “why”‘ to the “how.”

The Vision findings uncover the extent to which internal audit functions are lagging in their embrace of new technology. While 97% of respondents believe technology will enhance the complexity and volume of data they can analyze, a much smaller portion of practitioners are actively implementing new technology in their audit functions. For example, only 7% are implementing AI at an advanced level in their audit activities, even though 74% of respondents believe AI is the most important technology for the future of the profession. 

We as a profession have the responsibility to encourage greater adoption and successful implementation of AI and emerging technologies. The IIA has launched several online resources, including an AI Knowledge Center, to help practitioners successfully use AI tools within their audit functions. We are dedicated to continuing to support audit practitioners as they adapt and evolve to technological change. 

Shifting from assurance to advisory

Leveraging new technologies to enhance analytics and increase efficiency is a critical step toward developing more actionable insights for organizations and their stakeholders. The ability to transform insights into proactive recommendations and strategy is crucial to the future of the profession and an important shift that was underscored by the Vision findings. 

Overwhelmingly, Vision respondents expect that advisory work will become more essential in the near-term and will play a much bigger role in their annual plans. As the profession evolves, organizations and stakeholders have come to expect more from internal audit, and the shift from providing assurance and compliance services to becoming a proactive, strategic advisor is essential. As such, practitioners must shift their focus to identifying what organizations can and should do to stay ahead of potential risks and set themselves up for growth and success down the line. I believe Vision 2035 can serve as a roadmap, steering us toward a future where internal auditors are no longer merely the “compliance police,” but instead are seen as indispensable strategic advisors. 

Lifting as we climb

The overwhelming participation and global support for Vision 2035 has demonstrated a clear dedication and passion for the profession. Internal auditors gain a great deal of satisfaction from the contributions they make on the job. More than 75% of practitioners surveyed said that being able to add value to their organization is the most exciting part of the job, and many also cherish the chance to problem solve and be a trusted advisor to stakeholders. 

As we continue to advance internal audit over the next decade, we must channel this enthusiasm into improving external perceptions of the profession. Nearly half of the practitioners surveyed for Vision reported that being misunderstood or undervalued is the greatest challenge to the profession. However, I believe we can flip this if we prioritize stronger communication from important advocates and ambassadors for the profession – including internal audit function leaders, hiring managers and educators — about the value that internal audit provides and the key aspects of the profession that inspires the most excitement. 

Harnessing this enthusiasm to showcase the profession’s importance is essential to attracting promising new talent for the next generation of practitioners and fostering a motivated internal audit community.

The road to 2035

As we look toward 2035, we must transform the current perceptions of internal audit by embracing technology, broadening our scope, integrating internal audit with strategy, and enhancing our talent pipeline. Internal auditors, regardless of their level, industry or geography, must possess the skills to address emerging risks while inspiring confidence in stakeholders that we can effectively tackle any challenges in our way.

The Internal Audit Foundation initiated the Vision project because we understand the critical role The IIA’s dynamic leadership must play if the profession is to realize this envisioned future. The title of the report, “Creating Our Future Together” underscores the global effort of drawing insights and input from a community of internal audit practitioners worldwide, so too must be our efforts to continue the groundswell of momentum we have built.

We’ve created an online hub for the findings of the Vision 2035 project that clearly distills the data into a vision for the future and the opportunities ahead. This collection of resources will help arm our members with the tools and knowledge they need to impact meaningful changes within their internal audit teams and organizations at large. 

The IIA will lead the way to achieve Vision 2035. Central to our organizational strategy is a commitment to Advocate, Elevate, Educate and Collaborate to grow the profession and its influence. Our profession has a storied history of resilience and adaptability in the pursuit of excellence. Let us act collaboratively to build support from external stakeholders through close coordination as we chart a path forward that is founded on trust, anchored by integrity, and relentless in the quest for progress.

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Accounting

AI-Driven Automation and Continuous Accounting Frameworks

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1 day ago

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August 15, 2026

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The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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7 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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2 weeks ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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