The Importance of the Head of Internal Audit


By Diana Melville, CIPFA Governance Advisor

We all want to see transparent public services that deliver for the taxpayer, and evidence that the hard-earned money we sacrifice from our payslips each month is being used wisely. Whilst the external auditor is widely recognised as providing that assurance, the pivotal role played by internal audit is less appreciated. Internal auditors within public authorities have a key role to play in restoring trust in public services, by helping to ensure good governance, strong risk management, and effective internal control arrangements are in place. The head of internal audit’s annual opinion is a key source of assurance to the leadership team and audit committee and is essential for the annual governance statement.

Robust internal audits represent a crucial temperature check for organisations across the public sector. It is this regular temperature check that helps public leaders to know how they are delivering against their goals and objectives and whether they are getting sufficient value out of the public pound. Heads of internal audit are performing effectively across the public services, but inevitably there are challenges that impact on the function. The National Audit Office reported in January that concerns had been raised about the effectiveness of the internal checks and balances at some local authorities, including audit committees, internal audit and scrutiny. 

There is no doubt that we’re in challenging times when it comes to ensuring professional standards are maintained – after all, Heads of Internal Audit are operating within the very organisations that approve their resources, scope and authority to act. Not only this, but with local authorities in particular turning towards commercially driven investments to reduce their ever-increasing revenue pressures, the type and extent of financial risks faced by the public sector are changing. The combination of resource pressures and the unprecedented complexity of the modern local authority context, it is essential that auditors and their teams are properly supported to deliver a robust and sustainable service amidst these growing challenges. 

CIPFA’s recent statement ‘The role of the head of internal audit’ sets out five key principles. These are aligned with the UK Public Sector Internal Audit Standards (PSIAS) and outline the key expectations of heads of internal audit and the conditions that will allow them to thrive. The principles set out individual and organisational responsibilities, and represent best practice guidance that can form the basis of conversations between internal auditors, leadership teams and audit committees to improve effectiveness.  

Many organisations and their internal audit teams are already performing admirably in this space. Suffolk County Council has developed a risk-based planning tool in-house to align audit work to local priorities. North East Lincolnshire Council is going beyond assurance work to help develop a more ethical culture across the organisation. And Mersey Internal Audit Agency is supporting their health clients on joint ventures and cyber risks. These represent only a few examples of heads of internal audit that are providing exemplary support and assurance to their organisations and clients. More examples can be found in CIPFA’s publication that accompanies the statement – ‘Leading Internal Audit, Principles into Practice.’

It’s a tough time for internal auditors. These professionals are the critical friends telling you not what you want to hear, but what you need to hear. Internal auditors are often the ones telling the emperor he has no clothes. And with the right support, it is internal auditors who will provide the foundations for turning around trust in the public sector.

This article first appeared in Public Finance Magazine

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