Internal Audit Capability: Five Ways to Grow Critical Thinking Skills

Internal Audit Capability: Five Ways to Grow Critical Thinking Skills

CAEs rank critical thinking as one of the top five skills they look for in new candidates — but what does critical thinking actually mean? Learn why critical thinking is so valuable to internal audit and how audit professionals can proactively develop and apply this in-demand skill to position themselves for advancement in their organization.

What Qualification Is Required for an Internal Auditor? 

Internal auditors typically seek out certifications from the Institute of Internal Auditors (IIA). For the newest auditors, The IIA established the Internal Audit Practitioner designation as a prequel to the Certified Internal Auditor (CIA) certification. The CIA qualification demonstrates understanding of the standards, internal audit capability, and organizational governance.

What Skills Should an Internal Auditor Have? 

Auditors are not all alike, but there are certain skills and abilities that tend to distinguish excellent internal auditors. According to a report published by The Institute of Internal Auditors (IIA) Research Foundation and global human resource consulting firm Robert Half, several core competencies—knowledge or skills necessary to successfully perform in an internal audit role—are considered essential for internal audit professionals:

Foundational competencies

The foundational competencies include professional ethics and internal audit management.

Technical expertise

Areas for technical expertise include understanding the IPPF (the IIA’s International Professional Practices Framework), required internal audit capability, business acumen, and governance, risk, and compliance.

Personal skills

Personal skills, or soft skills, such as listening, communication, persuasion, collaboration, and critical thinking.

Internal audit delivery

The operational aspect of internal audit — from planning and objectivity, to resource management and strategic understanding — and improvement and innovation, which is critical for readying organizations for productive change.

Of all these competencies, critical thinking stands out because it’s mentioned most often by hiring managers recruiting for internal audit roles. In fact, 64 percent of chief audit executives (CAEs) rank critical thinking as one of the top five skills they look for in new candidates. But what exactly is critical thinking, and why is this ability so valuable for internal audit?

Critical Thinking Enhances Internal Audit

When we talk about critical thinking, we’re talking about the ability to actively synthesize, apply, and evaluate information in order to arrive at well-reasoned conclusions or solutions. One way to understand what makes critical thinking so important is that the quality of our thought affects the quality of what we produce. Lazy or mediocre thinking can be costly, while the ability to think critically can help internal auditors successfully scope, assess, and report out on risk.

Critical thinking isn’t just about collecting and analyzing information according to a checklist — it’s about actively looking for themes and patterns of repeat issues that might highlight root causes. It’s about incorporating information from outside the area being audited to develop a big-picture understanding of the company’s business strategy and operations as a context for its key risks or potential emerging risks.

In the planning and fieldwork stages, the ability to think critically can help to determine the most important areas for internal audit capability to focus on given limited resources. When it comes to reporting, critical thinking can help you make the call on which issues should be included in a report, and which minor ones can be safely excluded to avoid a cumbersome and long report. Crucially, evaluating how risks fit into a company’s larger goals and objectives can empower internal auditors to provide actionable insights about mitigating risks that are valuable to C-level executives.

How to Build and Apply Critical Thinking Abilities

While it’s a highly sought-after internal audit capability, CAEs recognize that critical thinking isn’t a talent that can be developed overnight. It takes practice to cultivate discipline excellence in thinking, but small improvements can add up over time to have a big impact.

Here are four ways that, as an internal auditor, you can apply and improve your critical thinking capabilities, enhance how you conduct internal audits, and better position yourself for advancement in your career.

1. Take Advantage of Training Programs.

You don’t need to reinvent the wheel — there are many training programs to teach you methods for improving your critical thinking skills. Check with your company to see what relevant online learning or in-classroom courses are available to employees. You can also access e-learning courses on critical thinking development via resources such as LinkedIn Learning, Udemy and Degreed.

Or, seek out more targeted training by taking a course specific to internal audit. The Institute of Internal Auditors (IIA) offers a two-day course, “Critical Thinking in the Audit Process,” that delves into the ways critical thinking can be incorporated into key elements of the audit process such as risk assessments, interviewing, testing and analysis, process documentation, and reporting. The end goal: provide tools to help you develop habits of critical thinking and audit more effectively.

2. Learn by Doing.

The daily life of an auditor offers frequent real-world opportunities to exercise your critical thinking muscle. For example, when scoping an audit, actively look beyond internal policies and procedures and performance reports. Seek out external sources of information to put yourself in the best position to make educated decisions about scoping.

Look for external thought leadership that highlights new trends and methods relevant to the area being audited, such as trade associations, current events, competitor intelligence, or analyst reports. Go a step further and enlist an external subject matter expert to help you identify areas most important to the topic’s success. Once you start looking, you’ll discover that you’re surrounded by opportunities to practice critical thinking in ways that will improve the efficacy of your audits.

3. Expand your Perspective.

Cultivate a big-picture perspective by considering the context of the processes you’re auditing. For example, you can take the initiative to learn about the “inputs” and “outputs” of the areas being audited. Develop a thorough understanding of how the information, data, or assets received into the process are formulated and provided, as well as how the data processed in the department is used downstream.

Another approach is to evaluate the often-overlooked human element by asking whether there have been significant changes to people, process, and technologies that could impact the performance of the process or team being audited. Take a step further back to assess the culture and tone at the top — are there intangible human aspects that may unduly influence the success of the area being audited? By expanding your perspective to examine the context of your audit, you’ll be in a stronger position to identify and mitigate organizational risks.

4. Put the Pieces Together.

Employ critical thinking to synthesize the information at hand and understand the larger story of the team being audited. Connect the dots to identify potential root causes of process breakdowns or successes. Examine whether there are significant trends or patterns to be seen, such as constant employee turnover. By using high-level thinking to find the connections between pieces of information, you can share benchmark information to provide context and understanding to a department’s performance.

5. Seek Continuous Feedback and Coaching.

Real-time, ongoing feedback and coaching from managers, peers, and even audit clients — whether it’s as the audit is being conducted or as part of a post-audit evaluation — can blend work experience with reflection and key lessons. This is especially true when the experience is still fresh in everyone’s memory.

2024 Focus on the Future Report

Ask your manager to share their expertise, whether it’s their own real-life lessons of positive (or negative) interactions, or guidance on how to more productively engage with specific stakeholders based on their preferred communication styles. Then, give thought to how you can apply what you’ve learned to be more successful on your next audit.

Keep in mind, patience is necessary when working to develop critical thinking capabilities. It is not easy work, as it involves analyzing and assessing more information and data points than normal. But it’s well worth it, since exercising this capability improves both you and your audits. Auditors thinking critically can create better scoped audits that take less time to perform because they focus on the things that matter most to the audit area. That improved focus can also lead to more relevant audit reports, improved audit team credibility, and faster issue remediation plans — among other valuable outcomes. So, be patient and persistent as you invest in yourself as a critical thinker over time.