Following the crisis in the financial system over the past number of years, a widespread review of governance in financial institutions has been taking place. Retrospective analysis by regulators and industry bodies such as the Senior Supervisor’s Group (SSG) and Institute of International Finance (IIF) have identified areas such as governance, risk management, risk appetite, culture and incentivisation as central causes of the systemic issues. It was inevitable that the role of Internal Audit would be brought into focus.

Whilst there has not been extensive criticism of internal audit’s part in the financial crisis, some would say that this reflects too low an expectation of what internal audit could, and should, have delivered. Many believe that internal audit was not sufficiently involved previously, and where it was present, it was insufficiently engaged in the substance of these areas. Since the financial crisis, many of the scandals that have hit the financial services industry have intensified the view that internal audit could be more effective in supporting boards and executive management in protecting the organisation.

Far from its traditional compliance roots, internal audit is increasingly being asked to not only provide operational business insights to the organisation, but also serves as strategic advisors – helping the organisation to address today’s key business risks and prepare for critical emerging risks that the organisation knows are approaching more quickly than ever before based on business strategy and continued global expansion.This is increasing the pressure on internal audit functions to provide a comprehensive audit plan, sufficient challenge to the organisation through a high degree of technical knowledge and real-time assurance over the effectiveness of the risk management framework – all within a highly constrained yet rapidly evolving regulatory environment.