Top Trends in the Internal Auditing Industry Revised

Top Trends in the Internal Auditing Industry
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Introduction
An internal audit in the government is necessary since it examines its accounting records and evaluates its conformity with the standard regulations, procedures, and controls. There is need to appraise the emerging trends in internal government auditing to keep pace with the changing roles, technologies, and others. Internal auditing enables the government to manage its financial risk and other vital activities. There are various trends in internal government audit, including cyber security, emerging technologies, strategic alignment, anti-bribery/anti-corruption, performance risk, culture risk and others. This paper investigates three problems facing the field of internal government auditing, which includes cyber security, corporate scandals, and varying roles of the internal auditors. It ultimately focuses on the question: how might internal auditors best handle an increase in cybersecurity attacks?
Findings
Top Trends in the Internal Auditing industry
Cybersecurity
Cyber-attacks have continued to increase in the recent years, which affect many organizations. Companies are demanding internal auditors to play their role and be objective, independent, and comprehensive when it comes to the review of cyber risks. Firms have decided that security and incident report from the CIO or CISO. According to Hay, Knechel & Willekens (2014), many companies require internal auditing to outline a cyber-auditing approach that addresses its needs, that of stakeholders, third parties, regulators and external auditors as well as the industry.

The internal auditing department is necessary for safeguarding the information belonging to the company.
The peril that is posed by cyber-attacks are real, significant and continuously evolving. Many boards and committees of organizations have put internal auditors to the task. They expect internal auditors to assess and understand an organization’s ability to manage cyber risk. According to Stewart & Subramaniam (2010), the work of internal auditor is expected to start by conducting a cyber-risk assessment, after which they come up with a summary report on the findings (p.330). The report is to be submitted to the board of directors and the audit committee. A risk-based multilayer cybersecurity internal audit plan is devised to ensure that an organization protects itself from cyber risk. The plan serves as a contingency plan in case these cyber-attacks occur. Therefore, efforts need to be made to contain the risks and come up with other mitigation strategies. The mitigation strategies will ensure that these are avoided early in advance.
Cyber risk is a top trend in the internal auditing industry due to the increasing focus of professionals towards curbing this situation. Many companies have been affected greatly by cyber-attacks, and there is an increased need for internal auditors to deal with the situation before it becomes destructive. Cyber attacks can result in serious consequences such as the loss of money, trust of customers, confidential information and other valuable things. As a result, they do pose a threat to the success of different government agencies and firms. Addressing the cybersecurity threats is also critical since it ensures that these organizations have safeguarded their assets and most importantly the financial information (Soh & Martinov-Bennie, 2011).
Corporate scandals
Internal auditing as a profession has been faced with increasing corporate scandals. The lack of internal audit or its role is a cause of concern. The lack of an efficient internal audit function has resulted in major scandals being witnessed in large corporations in the recent years. According to Stewart et al.(2010), many organizations are associated with lacking a whistleblower program, having a pay structure that is excessively linked to sales and having a system where major shareholder overlaps with the controlling functions (P. 34). Latest claims of corporate misconduct have increased. An example is a scandal involving Mitsubishi motors and others that continue to emerge. These corporate scandals serve as a good lesson for internal auditors to examine their roles in curbing the corporate failures or scandals. The corporate scandal has a negative impact on the success of the financial institutions.
Corporate scandal is a common trend, which has been in the news throughout the years. The failure of internal auditors to perform their roles effectively has led to the increase in misconducts that are harmful to a company’s reputation. It is critical for internal auditing to reconsider its roles to address these scandals. The failure of internal auditors to identify problems before they occur has resulted in corporate scandals being witnessed in many organizations. The failure to recognize these scandals lead to increased losses, and they have to be resolved quickly to prevent the collapse of businesses (Stewart & Subramaniam, 2010).
Varying roles of internal auditors
Internal auditors are now being required to perform roles that are different from the traditional ones. The scope of audits has continued to expand. Internal audit has adapted from the traditional work of financial auditing. The traditional roles of fraud investigations, operations, systems and distinct project audit effort have taken a back seat in the recent days. Internal auditing is now more concerned about regulatory compliance and business process optimization. There is an increasing demand for an appropriately structured internal audit function which has an impact on not only regulatory compliance but also an operational superiority. Addressing the issues will lead to increased compliance with the internal auditing structure. The increase in these changes may also lead to confusion to the auditor which is dangerous for organizations since they have to monitor the internal controls (Hay et al., 2014).
There is a fast advancement of the internal audit as a profession over the years and evolving nature of the roles and regulations. The rapid evolution has been due to the changing needs of organizations. In the past, internal auditing focused on accounting issues, but recently the profession is more concerned about detection of the critical risks that face institutions and the assessment of a company’s activities. Internal auditors are expected to provide recommendations that are to be implemented by the management. They are charged with the responsibility of producing real benefits for a company through systematic evaluation. The evaluation must be done based on the accounting principles, standards, policies and procedures, good practice and operations of a company. Internal auditors are expected to be flexible in expectation of more changes in regards to their roles. Increase in the flexibility should also enhance accountability for the progress of firms (Steinbart et al., 2012).
An Important Emerging Issue in a trend and what it means in context to the industry
Increase in the cybersecurity threats in auditing
Companies around the world have the responsibility of protecting their assets. Due to the advancement in technology that has been realized over the past decade, it is necessary to protect them against the incidences of cyber-attacks. The cyber vulnerability is one of the issues that have affected major firms around the world. The cyber weakness, financial crimes, cyber convergence, and email compromise among others, are some of the major issues in cyber security. The emergence of many technologies has increased the threat to the cybersecurity. Data attacks, unauthorized access, and damaging data and programs are on the rise, which leads to the vulnerability of the system. The attacks of information cause the customers to lose confidence in the certain institution. The decrease in the customer base may lead to the collapse of organizations due to the lack of profitability (Hay et al., 2014).
These issues have led to a change in the manner in which the internal auditing has to be conducted. Internal auditing has to be shaped in a manner that addresses all these emerging issues in the field. Internal or external corruption practices are the contributing factors to the increase in these crimes that are being experienced in the financial sector. Internal corruption is usually conducted among the members of the management all the top management while external corruption may involve soliciting for favors such as links to tax evasion. Additionally, competition among the members of the staff or the companies and culture of these companies are also other factors that have made it hard to ascertain the contributing factors to these crimes. Cybersecurity is regarded as the technology tools and business functions that are specifically designed to protect the information assets that belong to a firm. Companies and other businesses are now digitizing almost all the information that is available in the company. Therefore, the protection of the informational asset has been taken as a priority for companies and other agencies belonging to the government. It is important for internal auditing to come up with controls that ensure that such incidences are monitored early in advance before they affect or attack sensitive information belonging to the company (Pickett, 2010).
Some of the modes that affect the security of data include data breach, cyber-attacks, and increased cybercriminals. The data breaches occur much frequently and especially from the people who have been given access to confidential information belonging to the company. The breaches should be prevented through the enactment of a code of conduct and limited access to the people who can access given information.
On the other hand, the cyber criminals who are involved in stealing the information and assets of the organizations where they work need to be prosecuted. The stealing of such particular information is usually aimed at monetizing the information and in most cases the information is sold or given to the competitors or the rivals. The cyber-attacks have in many incidences been linked or been caused by the hacktivists, malicious outsiders, malicious insiders, and other state-sponsored actors. The attackers use the information for their selfish needs. Therefore, firms should put more emphasis on strengthening the security of the big data (Hay et al., 2014).
Effective risk management is an approach that can be used widely to address the problem of being attacked. The internal audit is expected to make sure that they have come up with effective cybersecurity controls that will ensure that the safety of information has been assured. There are various forms of defense mechanisms that can be used to mitigate the cybersecurity risks. Structures have set to ensure that that the internal audit assume the role, responsibilities accountabilities, and decisions that make it possible to minimize the impact of these risks to an organization effectively. Making informed decisions makes it easy for the auditors to figure out or establish the areas where risks may occur and work out the ways that are to be used in mitigating these risks. The internal audits also ensure that they have come up with strategies that will make it easy to make informed decisions to deal with the eminent risks (Agrawal & Cooper, 2017).
Risk mitigation procedures are also directed towards making sure that these cyber risks have been addressed. There are various lines of defense that the cyber risk can be addressed. The first line of defense is called the business, and IT functions that avails the mitigation procedures that are appropriate to make sure that the cyber risk has been evaded. The other line of defense which is the second is regarded as the Information Technology Risk Management Functions which provide the risk oversight and establishes baseline standards and policies as well as bringing about mitigation tools and procedures for monitoring. The internal audit is the third line of defense for evading the cyber risks. The internal audit monitors and assesses the effectiveness of the program independently. There is need to comply with the SEC requirements as well as the obligations that are related to the risks associated with the cybersecurity. Adhering to the set compliance guideline will serve as a way of mitigating against the issues cyber attacks in the internal auditing (Hay et al., 2014).
Conclusion
In conclusion, an internal audit in the government is necessary since it allows it to examine its accounting records, evaluate conformity with the various regulations and procedures and controls. It enables the government to manage its financial risk and other vital activities. Top trends include cybersecurity, corporate scandals, and changing roles of internal auditors. However, cybersecurity is very critical and has to be addressed in as an emerging trend in the internal auditing. Some of the modes that affect the security of data include data breach, cyber-attacks, and increased cybercriminals. The data breaches occur much frequently and especially from the people who have been given access to confidential information belonging to the company. The breaches should be prevented through the enactment of a code of conduct and limited access to the people who can access given information.
References
Agrawal, A.& Cooper, T. (2017). Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover. Quarterly Journal of Finance, 7(01), 67.
Hay, D., Knechel, W., & Willekens, M. (2014). The Routledge companion to auditing.
Pickett, K. S. (2010). The internal auditing handbook. John Wiley & Sons.
Steinbart, P. J., Raschke, R. L., Gal, G., & Dilla, W. N. (2012). The relationship between internal audit and information security: An exploratory investigation. International Journal of Accounting Information Systems, 13(3), 228-243.
Stewart, J., & Subramaniam, N. (2010). Internal audit independence and objectivity: emerging research opportunities. Managerial auditing journal, 25(4), 328-360.
Soh, D. S., & Martinov-Bennie, N. (2011). The internal audit function: Perceptions of internal audit roles, effectiveness and evaluation. Managerial Auditing Journal, 26(7), 605-622.