Anthony Pugliese, president and CEO of the Institute of Internal Auditors, is traveling the world as his organization expands globally, while laying the groundwork for priorities in the decade ahead.
The IIA released its
"There are a lot of misconceptions about what internal audit is," he told Accounting Today. "The current perceptions do not align with what the profession actually does."
The report points to the need for internal auditors to embrace advanced technology. "We can see our members all basically think technology is critical, but we're not seeing the kind of uptake that would actually demonstrate that we're going to be known for being technology savvy," said Pugliese.
The report recommends internal auditors need to expand the entire scope of the work they're doing. That aligns with a separate set of
"We don't want to be only Sarbanes-Oxley or just internal controls over financial reporting, but we want to be known for these other things that a lot of our members are already doing," said Pugliese. "Expansion of scope is important."
Other priorities include connecting internal audit with the strategy of a company as well as growing the pipeline of internal auditors.
"When we position internal audit in front of a bunch of accounting students, the reaction is actually really positive," said Pugliese. "They see it as a completely different path and one that doesn't carry the reputation negatively of public accounting, which I think they're trying to get away from. Actually, we've seen a lot of students get excited by the fact that they can become internal auditors and still work for a big firm. So the two can actually co-exist on their resume, on their CV, and that's really attractive."
Internal auditors have increasingly become fraud fighters. "We found out in our Vision project that more and more internal auditors are becoming responsible for functions other than internal audit," said Pugliese. "What we're seeing now is that they're moving functions like compliance or fraud into internal audit's bailiwick."
Pugliese is seeing growing interest in climate change and sustainability risks.
"Last year, in 2023 our members around the world rated climate change sustainability reporting as the 14th most prevalent risk, and then this year it moved to 13," he said. "But in three years, our members predict it'll be either four or five."
The IIA released its updated
"We started a big project that we call topical requirements which is the first time we've actually started to require minimum levels of work to be done before an internal auditor can issue an assurance level opinion on certain topics," said Pugliese. "The first one out of the gate is cyber. We think of it as a cyber standard. They have to follow it as members, but it was really because the area is somewhat mature. Cyber issues have been around since the late 1990s, early 2000s, and it's a mature topic, but one that's getting more and more risky over time. I think AI made that worse, so the need for standards is to ensure we've got a minimum level of performance occurring anywhere in the world."
The IIA has been releasing tools to help internal auditors adjust to the updated standards. "Getting ready for the standards has been a big deal for us," said Pugliese. "We've been releasing tool after tool after tool — some free, some we charge for — because the world that relies on internal audit is affected as well."
The IIA is seeing more demand for such material as the organization expands globally. "You could pick up an internal auditor's opinion on cyber and it would carry the same weight in Africa as it would in Latin America or North America, that there could be a level of reliance, and that's because of all of our advocacy work, that we felt that was important," said Pugliese. "We get out there and tell governments, you can rely on internal auditors to help you do some of this work. Having a standard around topics is not very unusual in the accounting world, but it is in the internal audit world."
The IIA has been growing and has now crossed the 250,000-member mark. "We'll end up this year probably at 255,000 with a lot of growth occurring in Asia and the Middle East," said Pugliese. "We really didn't have a strong market in the Middle East even five years ago, so we're happy about that."
He has been finding growing interest in Saudi Arabia, Oman and other Gulf countries, as well as parts of Asia like China and Japan. The Saudi Minister of Audit sits on the IIA's global board.
"When they give out awards to say this is the best internal audit team of the year, or the most innovative team of the year, it's a really big deal," said Pugliese.
He noted that many countries around the world have what they call Supreme Audit Institutions, SAIs, and there's an association for these Supreme Audit Institutions known as INTOSAI, the International Organization of Supreme Audit Institutions. The IIA has been getting more involved in such groups.
In the U.S., the IIA has been working more closely with the Public Company Accounting Oversight Board after
"The standard basically stated that external audit should control the entire process, and the example they gave was that because employees like internal auditors would be more apt to change the confirmation," said Pugliese. "We asked for what data supported that in the United States or anywhere else in the world, and we realized that they were unable to produce any data to support that."
The IIA started a letter-writing campaign and met with four of the PCAOB's board members, including a former internal auditor, Christina Ho. Eventually the objectionable section was deleted in the final version of the standard, and the PCAOB apologized in the disposition of comments.
"You couldn't ask for a better outcome," said Pugliese. "It was no disrespect, no harm intended, but, because of that, we started a relationship. Now, when they call and they want to have a really solid task force on any given topic, they'll reach out to us for an internal auditor."
The IIA started its own political action committee last year and plans to do more advocacy work in the U.S. and abroad.
"We're introducing some advanced advocacy strategies next year to start lobbying national governments outside of the United States," said Pugliese. "They're not quite used to the system that we have in place, where you hire people in Washington, and they target the right people setting laws that are relevant to you, and you go talk to them, and hopefully you get an output. This is very different. We're doing it in Africa and we're trying to make sure that their advocacy needs are met. We'll probably have one in the Middle East, which is very unusual, but that's more of an informing function for the countries that are more monarchy based. You don't typically lobby a monarchy. In Latin America as well, we're going to start lobbying those governments to more adequately recognize what internal audit does."
