Tim Sandwell looks at how internal audit roles have been transformed and the opportunities they provide today.
Modern internal auditing emerged over 70 years ago as an independent checking function in the public sector before being adopted by the private sector. From what was then, rather unkindly, often labelled as a group of number crunchers and corporate policemen, internal auditing has evolved into what is today a highly sophisticated control function.
In response to corporate scandals such as Barings, Enron and more recently Lehman Brothers, there has been a sea-change in the role of internal audit and its activities. Today internal audit provides crucial reassurance regarding risk and control, maximising the effectiveness of business processes and ensuring that best practice is properly disseminated.
It is beyond question that internal audit has developed as a vital part of corporate governance but what can it offer in terms of a longer term career to aspiring ACCAs?
It is true that for many decades newly qualified accountants joined an internal audit function as an entry point into a wider corporate career development plan. Internal auditors are privileged in having access to all business operations and corporate functions, therefore providing a natural training environment for future executives.
Many young accountants would spend several years auditing in various corporate and often international environments, moving through a number of promotions. Ultimately they would gain the credibility and experience to further their career outside of internal audit.
Historically, commonplace moves would have been into accountancy and finance, with more occasional ventures into areas such as project management, corporate treasury or regulatory compliance. For those who remained in internal audit the future would be dictated by promotions through the audit ranks, increasing management responsibility and with the ultimate goal of becoming a chief auditor.
Unfortunately for many, senior promotions were not always achieved, leaving internal audit functions with layers of career auditors who were effectively stuck. In previous decades this negative perception of an environment lacking ambition or ability was detrimental to aspirational accountants choosing their career options.
Internal audit has changed Over the past ten years internal audit has experienced a significant upskilling of the discipline, with increasing technical specialisation and a much heightened profile both within the public and private sectors. This has been driven not only by the importance of internal audit to effective corporate governance, but also by the methodologies employed which require industry or technical specialists who can relate to senior management. Executive management, regulators and shareholders are demanding internal auditors have an in-depth understanding of complex areas of their operations, which previously may not have been needed. Whether this is looking at international financial reporting, financial crime, cyber security or transformation projects, internal auditors now need much more than the generalist control experience of the past.
Internal audit functions in all sectors now require specialists. Suitable candidates may have developed their skills within internal audit, or increasingly from other specialist business disciplines. We have seen an influx of professionals with diverse backgrounds including actuaries, programme management, data analytics, financial modelling or technology, who perceive internal audit as an exciting career option. Those with accounting backgrounds are also supplementing their technical skills with business experience and professional qualifications in order to qualify for opportunities.
Where have the grey suits gone? The grey-suited auditor is a thing of the past. Internal auditors today require a whole range of soft skills to deal with the diverse stakeholders they are likely to encounter. Direct exposure to executive management and specialist committees, regulators, third parties, suppliers and external auditors is part of the role. Internal auditors need to be able to explain, educate, negotiate and influence at all levels. They also need to be credible, articulate and, at times, resolute in their convictions. The levels at which they are operating will also require them to be increasingly experienced, offering career options that previously did not exist.
The professional development of internal auditing has also made it a much more competitive environment in terms of both the calibre of potential recruits and the remuneration offered to attract and retain them.
Plan your career well So how will a career in internal audit develop for an aspiring ACCA? The career direction may well be influenced by the industry sector you work in and this is something you should consider carefully when embarking on a career plan. More regulated industries will inevitably have stronger control functions and may offer greater diversity going forward. Consider what your specific interests are. Specialist audit teams will exist to cover activities in a range of technologies, business sectors, central functions, project management, financial crime or change. When applying for roles, look at the different teams or divisions within group audit and where you might be able to pursue international opportunities or potential secondments.
You can also enhance your career prospects by augmenting your accounting qualification. Many internal auditors no longer have a single qualification such as ACCA but acquire further certifications allowing them to be credible subject matter experts. Not only does further specialisation increase professional adeptness, but it combines with more sophisticated inter-personal, negotiating and influencing skills to mould highly effective senior executives. Increasingly we are seeing senior audit executives moving into other executive committee positions or directly to head up other functions such as compliance or change.
While internal audit now offers a challenging and rewarding career in itself, the diverse skills acquired can open up a whole range of opportunities in other areas, allowing internal audit to become a mobile and flourishing environment for professional development.