Digital Transformation of Internal Audits - Key aspects

November 16, 2021
Santhosh Nellayappan

Through my interactions with many of you in person, or through Social Media Platforms, I am convinced that we all are in the same page when it comes to whether Internal Audit should take the Digital Journey or not. I have seen that a vast majority of us are of the view that Digital is the only way forward and that too, the journey must start now!

Wish to share some key words/concepts that come to my mind, when we think of Digitalization of the Internal Audit process. This holds good for Digitalization of any process in any organization. Some of these may sound very basic, but basics are most important in any transition.

Digital Enlightenment

The first step in any Digital journey is to enlighten the people concerned, about the change, the need for it and its benefits. If the user is not convinced, there would be resistance (it is human to resist change!), and any resistance would be detrimental to the interest of the Digital Journey itself. It is extremely important to bring all stakeholders on board on such an idea. More so in case of the Auditors in case of IA, as they are ones to be affected most, by such a change.

Digital Enablement

Enabling the users for the Digital Journey is the next step. This would be at the minimum if the technology/software that is chosen is user friendly. Generally, User Experience is not on the top of the list of requirements while selecting/creating a software to work with. This scenario calls for more efforts being spent on Enablement, whereas such 'Enablement' shall be at the lowest, if the software is user-friendly and easy to navigate. This also leads to "Digital Enthusiasm" with the user

Digital Efficiency

The next level is to drive efficiency on the digital platform. The idea of going digital is all about bringing in efficiency, so why drive efficiency on the platform? Valid question. Anything new takes more time. Initially the 'inertia' towards the idea and the fact that people are not used with the platform acts as a huge restricting factor. Users to should be encouraged, rewarded and if need be pushed, to use the new technology. As they say, 'practice makes one perfect'; as they use the solution more and more, they get used to it and become efficient in using the solution. Without this, the solution cannot drive efficiency. Some software providers (Audit360 for sure) offer a service around this, if there are internal challenges or resource crunch, such services can be made use of to push Digital Efficiency.

Digital Experience

It is very important to ensure good experience for the users on the system. How can this be achieved? This can be done by putting in place, a robust UAT process. One or a small set of users are asked to test the solution for its modules, features and functionalities and any shortcomings to be notified to the software provider. This must be done for subsequent feature release as well. This enables a stable end-user experience. A good 'Digital Experience' is key to the success of any Digital transformation.

Digital Effectiveness

Efficiency is doing things right and Effectiveness is doing right things.  Ensuring "Digital Effectiveness" is a matter of prime importance. When digitalizing any process, especially Internal Audit, it is imperative to look for improvements. Migrating the existing manual process "as is" to the digital solution would not help. Notwithstanding the effectiveness of the current process, there are always possibilities that needs to be looked into. The process of going digital should be looked at as an opportunity to critically evaluate the process and bring in improvement wherever possible. Bring in the right process, right workflow and right controls is that makes the digital solution more effective than the current process.

Digital Evolution

Ideally the technology that is being adopted should evolve according to the evolving business scenario. The least expected is that the technology adapts to such changes, that are dynamic. A lot of consideration must go in, while deciding the technology solution and the technology provider with emphasis on this point. A growing organization functioning in a dynamic environment such as today's cannot afford to be switching Software’s. This takes away lot of time, effort and energy and derails the focus from the core business. It is therefore imperative to choose the right technology solution and provider for a smooth digital journey.

Digital Edge

With the above steps followed well, any organization would be sitting on a "Digital Edge" above its peers or Competitors. Such an edge would enable the organization to attract more customers. It will also enable the organization to enhance the Stake-holder value. Organizations enjoying a Digital Edge would also be able to improve their ability to attract investors/investment.

Looking forward for your views

Abbreviations used

IA - Internal Audit

CAE - Chief Audit Executive

UAT - User Acceptance Test


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