Why Internal Audits are important for CFOs.

A Chief Financial Officer (CFO) is primarily concerned with an organization’s financial performance, while Internal Audits (IA) focus on risk management, governance, and internal controls.

Financial success and risk are perhaps two sides of the same coin, so every CFO should clearly understand the value that good Internal Audit techniques bring.

This short article aims to outline the value CFOs should expect from IA, and equally, help IA ensure they provide maximum value to CFOs.

To understand the interaction between IA and CFOs, we should understand: 

  • The CFO role 
  • Internal Audit’s role
  • How Internal Audit supports the CFO
  • What Internal Audit needs to deliver maximum value

The CFO role

The CFO’s responsibilities are varied, but focus on three fundamentals:

  • report financial performance
  • ensure financial liquidity
  • generate a return on investment

Additionally, the CFO’s duties normally include sitting on the company board of directors, contributing to the company’s strategy, supporting the company’s mission, values, and purpose, and leading the finance department.

Internal Audit’s role 

Internal Audit is concerned mainly with controlling risk. The role is neatly defined by the CIIA:

“to provide independent assurance that an organisation’s risk management, governance and internal control processes are operating effectively.”

For a further breakdown of Internal Audit’s role, read this.

Four ways Internal Audit supports the CFO

To understand the value of IA to the CFO, here are some CFO objectives that IA supports:

  1. Protect the organization. Good IA investigates the organization’s resilience in all areas, including supply chains and cash position. After the 2008 banking crisis, the CIIA developed a code for Internal Audit to protect Financial Services firms. This code now applies to all UK companies and gives IA:
    • – access to all areas of the organization
    • – a direct line to CEOs
    • – a seat at executive committee meetings.
  2. Ensure internal financial controls adhere to company policy, for example in accounts payable. SOX compliance means Senior Managers in all public companies are legally responsible for accurate company financial statements. Controls must be documented and reviewed as part of an external audit. Hence, Internal financial audits are essential to for the CFO to have confidence in the accuracy of financial reports.
  3. Support a clear, fact-based strategic vision. Internal Audit tools can provide a strategy minded CFO with a clear report of how issues and risks affect many parts of the organization, including: operations, finances, investments, IT, cyber security, legal, compliance, brand value and ESG.
  4. Deliver a robust ROI. This is not easy to calculate, but the evidence suggests that IA delivers a high ROI. Sources such as Deloitte estimate IA costs between 0.026% to 0.126% of revenue for Fortune 500 companies. The financial benefits of IA are hard to quantify, but it’s clear that IA prevents many risks and fines before they incur large costs to the organization.

What does Internal Audit need, to deliver the most value?

We recommend keeping an Internal Audit checklist of the key requirements IA needs for the team to work to the best of their ability.

  • Work at the right level: IA must have the authority to conduct their work, report to the top of the organization, to people that care about the issues that IA deal with. This also means access to executive meetings.
  • Independence and objectivity, and have adequate resources to do so, agreed by the board of directors, not just the CEO.
  • Explicit codes of practice, set by the board of directors and informed by industry bodies.
  • Purpose built technology to monitor data, enforce policies, and log every user action. Without this, admin heavy, granular work is extremely challenging to do. The best internal audit software offers further functionality such as data analytics and predictive modelling, that identify hidden risks even earlier and deliver even more benefit.

Summary

Internal Audit benefits the whole organization and the relationship between CFO and Internal Audit should be collaborative as they both work to ensure the success of the organization, albeit from two different perspectives.

If you found this article helpful, you might be interested in our Internal Audit Guide that covers how Internal Audit Management platforms and Internal Audit tools can help your Inte

Solutions

The AdaptiveGRC platform offers a variety of modules to help manage GRC activities for your company.

In order to meet your company's specific needs, our team of experienced developers can tailor the required functionalities to deliver exactly what your company needs. If your company requires a customized module to effectively meet its needs, we can help.

Let us fit the best solution for your company. Fill out the form below.
GET CONSULTATION

Streamline Your GRC Activities with AdaptiveGRC
Get Results Faster.

Schedule a Demo
  • Fill out the form.
  • Our consultant will work with you to determine what your company needs.
  • We will schedule a product demo to show you the required features.
  • We will gain your feedback and tailor a tool to your needs.
OUR TESTIMONIALS

Read Gartner reviews to find out what users think about our solutions

One of the best GRC software with very good price

Adaptive GRC offers a great deal of flexibility in supporting GRC&AUDIT processes. The product is continuously developed and the customer receives new possibilities and functionalities. In addition, the price is very attractive in comparison to competitive products. The support team takes a flexible approach to the customer's needs.

Sebastian B. CEO | Computer & Network Security

Comprehensive platform for managing risk and compliance

I used AdaptiveGRC Compliance and Risk Management modules for more than a year. Implementation went smooth, and the support team was always very helpful. I especially value the functionality AdaptiveGRC offers - all GRC processes can be managed in one tool, and there is a single database. The tool helped my organization lower operating costs and gain a better understanding of risks in the organization.

Marcin K. Chief Information Security Officer | Financial Services

Perfect program for compliance control

It is amazing that thanks to AdaptiveGRC individual assessment management can be shortened from days to minutes. The tool can generate reports for different stakeholders containing only their desired assessment outcome data. I appreciate much the possibility of generating compliance specification lists for supplier contracts or internal departments.

Jasween K. Compliance Pharmaceuticals

AdaptiveGRC supports insurance companies in their risk and compliance management processes

I used AdaptiveGRC to 1. support insurance companies' compliance management processes following a complex industry-specific regulation. 2. I also used AdaptiveGRC to support the process of managing and monitoring data processors as GDPR came into effect. I experienced a significant increase in efficiency in both cases.

Verified Reviewer Insurance | Self-employed

What's in a name...

As the name is representative, AdaptiveGRC is a complete, interconnected GRC solution that can be adapted to organizations across industries and size. The AGRC team did a superb job designing and building a best-in-class GRC solution that addresses the challenges faced in today's uncertain and ever-changing global business climate. Working with the AGRC team has been a pleasure and the support they have provided is exceptional.

D Scott C. Business Development | Biotechnology

Financial institutions could benefit greatly from AdaptiveGRC

I am happy to be able to use AdaptiveGRC in my work. This dedicated solution is very helpful for anyone that has to fill out the SREP questionnaire. The extra time I gained was priceless. The platform's design was also very appealing to me. The fact that it was so simple to use was a major plus for me. Due to its comparison capabilities with past years' forms, I was able to cut down on the amount of time it took to complete the new questionnaire. What is more, I was able to monitor the progress of the people assigned to the process.

Anna C. Head of Fin Crimes Team | Banking

Great support for inurance company

My overall experience has been great. I also liked the layout of the platform. The time and control I gained is invaluable. I like the fact that it was very easy to use. It definitely allowed me to shorten the time I had to spend on filling out the SREP questionnaire. I also could easily control the status of work of my team members, check their progress, and monitor on daily basis.

Verified Reviewer Insurance

AdaptiveGRC - Big Player in GRC

Easy to install and easy to configure. Out of the box solution. Cloud based or Server. AdaptiveGRC is an enterprise governance, risk management and compliance (eGRC) solution set with unique and unequalled capabilities. AdaptiveGRC can be deployed as one fully interconnected solution suite, or you can choose one or more modules.

Leigh M. National Accounts | Consumer Goods