Auditors confront era of ‘hypervolatility’

The internal audit profession is dealing with a period of “hypervolatility,” according to a new report, requiring audit professionals to adjust to flat or shrinking budgets and the encroachments of artificial intelligence.

The report, released Wednesday by technology provider AuditBoard, found AI readiness lags behind execution: While 39% of the 213 global internal audit leaders polled expect AI to transform their work by 2030, most teams aren’t prepared to govern it. Nearly two-thirds (63%) of the respondents say their organizations lack a formal AI governance framework, and only 28% feel confident auditing AI risks. Another 28% warn the profession risks becoming irrelevant to business strategy if it fails to adapt to AI.

The report also found that while AI is improving efficiency for internal auditors, it can’t replace the human qualities that distinguish outstanding auditors, according to the respondents, including professional skepticism and inquisitiveness (65%), relationship-building and communication (60%), ethical judgment (45%), and critical thinking (41%). 

“Internal audit stands at a tipping point. The pressures outlined in the report create unprecedented risk for the future of the profession,” said Richard Chambers, senior advisor for risk and audit at AuditBoard, in a statement Wednesday. “Thriving amid hypervolatility requires a two-pronged approach: internal auditors must utilize AI to automate routine tasks, and simultaneously leverage these human ‘superpowers’ to move beyond merely reporting what is happening to become the foresight-driven strategic partners the business needs.”

Budgets and staffing remain flat or shrinking for internal audit, with 43% of the respondents reporting no budget change year-over-year, 18% reporting reductions, and 57% maintaining flat full-time equivalents. while new risks emerge and expectations arise. 

Over half of the audit leaders surveyed aim to be seen as trusted advisors, but only 21% of the respondents indicated their departments are viewed in this way, while 15% said their teams are still mainly perceived as compliance enforcers, but that’s a label only 1% of the respondents want to retain.