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Take comfort in gradual change in an era of audit upheaval

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1 year ago

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There is a saying that has been going through my mind of late: “May you live in interesting times.” Its origin is vague but many attribute it to a translation of a Chinese curse. Indeed, while the saying sounds like a blessing, it is more likely that wishing someone a life of interesting times is cursing them to a life of upheaval and conflict.

Whether you are optimistic, neutral or pessimistic about the current state of affairs, it’s safe to say we are all living in interesting times. Disruption has become a way of life in the 21st century. Consider this: In just the past five years we have experienced a global pandemic, geopolitical instability driven by wars in Ukraine and Gaza, intensifying natural disasters fueled by climate change, and technology disruptions brought on by artificial intelligence. Presently, we are all trying to decipher what will happen next with tariffs and their impacts on financial markets, which of late are behaving more like amusement park thrill rides than reflections of economic conditions.

I have written extensively about how today’s business leaders must learn to not only manage disruptive change but embrace it. In the second edition of my book, Agents of Change, I make the case that we live in an era of permanent upheaval. 

However, I ran across a couple of interesting data points tucked into the latest Pulse of Internal Audit report from The Institute of Internal Auditors that gave me pause. They reflect gradual yet monumental changes in the profession in which I’ve spent 50 years, and they give me great comfort and hope for the future.

The Pulse data, which is gleaned from a survey of internal audit leaders across North America and Canada, show we’ve reached the inflection point in the generational transition. At 58%, Generation X (1965-1980) still makes up the lion’s share of chief audit executives, but the percentage of audit leaders who are millennials (1981-1996) now matches those who are baby boomers (1946-1964) at 21%. 

This clearly reflects the passing of the torch, because the numbers will continue to skew toward a younger generation of internal audit leaders with each passing year. I’ll explore what that means in a moment, but I also want to mention a second significant data point. The Pulse reports that women represent 44% of CAEs in North America overall, and a breakdown by age group shows the figure is significantly higher for audit leaders under 40.

The changing CAE gender profile

When I began my career in internal auditing in 1975, a woman leading an audit function was rare. However, over time pioneering women leaders emerged, including Carmen LaPointe, Betty McPhilimy and Patty Miller, each of whom went on to serve as IIA global board chairs. Since then, the IIA has had several other women lead the board including Angela Witzany, Jenitha Jones, Sally-Anne Pitt and current chairman Terry Grafenstine. The profession approaching true gender balance in leadership is something in which all internal audit practitioners should take great pride. Unlike generational change in leadership, gender equality is not inevitable.

When we dive deeper into the data, the true significance of the progress toward gender equality emerges. Baby boomers continue to skew the data toward males, where they make up two-thirds of CAEs born between 1946 and 1964. However, the gap closes significantly among Gen Xers (1965-1980) where women make up 48% of CAEs and comes to 50/50 parity among millennials (1981-1996).

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Source: 2024 North American Pulse of Internal Audit, IIA

A quick analysis of gender breakdown by industry finds women are making solid progress in other areas, as well. But we’d be hard pressed to find one where half of the leaders are women.

  • Medical/health – 43%
  • Education, consumer services and government – 40%

Women still lag significantly in leadership roles in:

  • Food and beverage – 30%
  • Transportation/logistics/supply chain, and automotive – 19%
  • Aerospace/defense – 18%
  • Agriculture – 17%
  • Oil/gas/mining – 16%

It’s also encouraging to see the rapid pace at which women are ascending to leadership roles within the profession. We have available data from the IIA’s 2015 CBOK report, which provides a touchpoint. The report, which was based on a 2014-15 global survey of audit practitioners, found women held 31% of CAE positions globally and 39% in North America. In just 10 years, the percentage of female North American CAEs grew 5%.

Generational changes

Moving to the proverbial changing of the guard, the parity between baby boom and millennial internal audit leaders was inevitable as older CAEs leave the workforce. Of significance here is the timing. When I first saw the data, I thought to myself, “Whew, just in the nick of time.” Allow me to elaborate.

At the risk of generalizing, millennials bring to the table technology skills, views about work-life balance, and preferences in communication styles, creativity and diversity that are more suited to 21st century challenges. To be sure, baby boomer optimism, work ethic, loyalty and focus on teamwork helped found and build some of the greatest organizations the world has ever seen, including Microsoft, Apple, Nvidia, Amazon, Virgin Atlantic and others. Baby boomers also forged the digital foundation on which millennials will build the future.

However, the demands created by a world in near-constant upheaval require greater flexibility, agility, resilience and innovation that millennial characteristics are more likely to provide. It’s more than millennials being technologically adept. For example, millennials use digital tools for quick communication that support agility and flexibility, while boomers are more likely to prefer formal meetings and written communication. 

There is little doubt that both generations share a desire for success and achievement, but their approaches and values differ significantly, reflecting the evolving social and economic landscape of their times. 

From an internal audit perspective, greater numbers of millennial CAEs will invariably accelerate the long-overdue widespread adoption of technology among internal audit functions. What’s more, their communications styles, creativity and embracing of diversity will help position the profession to support organizations that are flexible, resilient, agile and, most importantly, built to succeed in interesting times. 

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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5 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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1 week 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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Accounting

Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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