Critical Risk Areas for Audit Efforts in 2022 and Beyond

The sweeping global impacts of COVID-19 created what is arguably the greatest disruption for internal audit in the history of the profession. The pandemic heightened risks in virtually every facet of enterprise operations. Internal auditors, however, met the unprecedented challenges through transformative actions and resiliency, according to AuditBoard’s 2022 Focus on the Future survey of audit leaders. 

Nonetheless, internal auditors recognize the need to prepare for the future by ramping up resources and talent to effectively manage risks on the horizon. AuditBoard’s 2022 Focus on the Future survey uncovers the critical areas where auditors are directing their efforts from 2022 to 2025. Read the survey highlights below and download your free copy of the full 2022 Focus on the Future report. 

2022 – 2025 Top Risks and Audit Effort

Cybersecurity/data privacy remains the highest risk category for 2022, with over 90% of internal audit leaders rating it a “high risk.” In addition, audit leaders are reporting their department efforts are finally catching up with the criticality of cybersecurity – a departure from the past, when cybersecurity received scant audit effort relative to its risk assessment.

Additionally, several risk areas that were ranked low for 2022 are projected to have higher risk assessments in 2025. These include:

• Changing economic conditions.
• Disruption of business.
• Diversity, equity, and inclusion.
• Sustainability and climate change.
• Effectiveness of board oversight of management.
• Artificial intelligence implementations.

Of these higher risk areas, internal auditors plan to increase allocated resources to addressing artificial intelligence, sustainability/climate change, and diversity/inclusion by 2025.

Resources and Talent

A positive sign for internal audit is that resources increased in 2021 – and are expected to increase even more by 2025. Roughly half of those surveyed expect staff and budget increases over the next 12 to 24 months, while only a few anticipate declines.

The skill sets where internal audit functions desire to upskill their staff the most are analytical/critical thinking, business acumen, risk management, IT, and cybersecurity. For non-technology-related skills — analytical/critical thinking, communications, business acumen, and risk management — upskilling current employees is by far the favored approach.

Effects of Remote Work on Internal Audit

More than half of internal audit leaders said they hired remote workers due to the pandemic, while a quarter saw their workers “poached” by other organizations.

Internal audit teams also significantly expanded their use of technology. Auditors increased the use of video platforms to hold virtual meetings and relied more on data extraction/advanced analysis and cloud-based audit management software. Internal audit departments will likely find long-term benefits from these improvements, even after life returns more to pre-COVID norms.

The most prevalent negative outcome was weakened relationships with personnel outside of internal audit — an observation shared by roughly 40% of audit leaders.

Sustaining Internal Audit Resilience in an Era of Risk Volatility

Results of the 2022 Focus on the Future survey offer several important opportunities for internal audit leaders to optimize their impact:

• Identify and prepare for emerging risks – such as sustainability/climate change, business model disruptions, artificial intelligence, and diversity/equity/inclusion – now, not several years from now.
• Proactively address skill gaps in internal audit departments to ensure the right people are in place for the future.
• Leverage what was learned over the past year-plus regarding remote working.
• Expand the use of technologies, including audit management and data analytics software, wherever they can most improve efficiency and effectiveness.
• Build and maintain relationships with key stakeholders within the organization, whether they return to a central office or work remotely.

To learn more about 2022 and 2025 top risks and outlooks for internal auditors, download the full 2022 Focus on the Future: Internal Audit Resilience and Readiness in the New Age of Risk report.