02 Aug The Role of Emerging Technology in Future-Proofing Internal Audit Processes
2 August 2024: At the recent Governance 360: Navigating and Influencing the Future of Governance conference, held at Hotel Sky in Sandton and hosted by the Leadership Academy for Guardians of Governance, technology, particularly artificial intelligence (AI), emerged as a central theme, underscoring its growing influence in the field of internal audit and governance.
With the ongoing developments in AI and robotics, the discussion at the conference explored the benefits and disadvantages of how these technologies could be utilised to enhance the profession of internal audit, explains Shirlene Siddall, CEO of the Leadership Academy for Guardians of Governance.
While the expertise of internal auditors and robust processes are vital for accurate financial reporting, embracing new technologies and maintaining strong governance practices are essential to stay ahead in 2024.
“As governance professionals, it’s crucial to think strategically about AI – it’s coming! We need to build bionic businesses, where humans and machines work together, augmenting human skills. ChatGPT will help us analyse our data in real-time, but you need to anonymise it. We have the tools now for the future of governance, and professionals need to become more data-savvy and stay up to date,” explained Futurist Graeme Codrington as he set the scene for the day’s discussions.
In fact, industry stalwart, Dr. Len Konar, added that data analytics stands out as a leading technology shaping the future of internal audit. “The problem is that many internal audit departments, especially those struggling with resourcing, don’t know where to start.” He added that many internal audit departments should opt for investing in technology and training auditors to understand AI, particularly in resource-strapped environments and where time is crucial.”
Konar also pointed out several uncomfortable truths that internal auditors must confront, one of which is whether internal auditing is adopting technology fast enough. “In recent years, emerging technologies like artificial intelligence, machine learning, and robotic process automation, have all been impacting internal audit.”
However, Codrington cautioned against blind trust in technology. “I don’t think internal auditors are going to be replaced by AI,” he emphasised. “However, internal auditors who use AI effectively will redefine the audit landscape. “Professor Deon Rossouw, former CEO of The Ethics Institute also cautioned that AI ‘is ethically ambiguous’. “We need to have ethical filters on with regard to AI. Ethics should be a consideration in the design of AI solutions. Often it is not about what is desirable, but what is possible.”
Another key theme during the conference was the heightened expectations of accountability that organisations face from various stakeholders, including boards, investors, regulatory bodies, and civil society organisations.
Ingrid Ravenscroft, Executive Head of Combined Assurance at Sasfin Bank Limited, highlighted the importance of concise and relevant communication with boards: “When we are presenting to boards, we need to make sure that we are giving them the right information and not overloading them in order to safeguard ourselves.”
Prof. Parmi Natesan, CEO of the IoDSA, echoed this sentiment, adding that compliance with the King IV Report often becomes a tick-box exercise rather than embodying its true intent. She stressed the foundational role of ethics in King IV, a principle that should never be overlooked.
Accountability was further underscored by Rianné Potgieter, CEO of the Compliance Institute Southern Africa. She pointed out that accountability ultimately rests with the governing body. “In South Africa, we don’t have an accountability regime, but the COFI Bill is on the way. By 2025, we will see more movement, with full implementation expected in 2026,” she noted.
Sustainability was also a strong point of discussion amongst delegates, who are governance experts from across the country. Professor Mervyn King, Senior Counsel and former Judge of the Supreme Court of South Africa, explained that South Africa’s adoption of integrated reporting in 2009 has given the country a significant advantage over others that did not embrace sustainability or environmental, social, and governance reporting.
However, he mentioned the ongoing debate about the most suitable standard for sustainability reporting in the long-term interest of South Africa. “If you report on sustainability issues but not your financials, you’re missing the full picture. The two should align with how the company operates. The world has moved from shareholder primacy to value creation,” he stated.
Leigh Roberts, CEO of The Integrated Reporting Committee of South Africa, supported this view by asserting that an integrated report promotes integrated thinking, which enables boards to make informed decisions. She added, “The business reality is that integrated thinking leads to better governance and a more comprehensive understanding of an organisation’s impact.”
Meanwhile, internal audit professionals are preparing for the future by changing their mindset to be recognized as trusted and strategic advisors, explained, Arlene-Lynn Volmink, CEO of IIASA. “They add value to an organisation by partnering with management to mitigate emerging and evolving risks.”
ENDS
About the Leadership Academy for Guardians of Governance:
The Leadership Academy for Guardians of Governance is a wholly-owned subsidiary of the Institute of Internal Auditors South Africa. The Academy serves and trains professionals who fall within the greater ambit of governance and supports professional bodies in their quest to supply the market with high performing professionals. Its vision and mission are to be recognised as the skills development and quality assurance provider of choice and to provide high quality skills development programmes and quality assurance services for Governance, Risk and Compliance professionals.
Media Contact:
Brindaveni Naidoo
Account Manager | SWM Communications
Tel: +27 84 566 7459
Email: brindaveni@swmcommunications.co.za
Contact:
Shirlene Siddall
CEO | Leadership Academy for Guardians of Governance
Tel: +27 11 609 1761
Email: shirlene@governanceacademy.co.za