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Understanding the Value of Strategic Alignment in Internal Audit Functions

In today’s dynamic organizational landscape, internal audit leaders are experiencing a significant shift in their roles and responsibilities, as highlighted in the latest findings presented at the Great Audit Minds (GAM) conference. A new survey conducted by The Institute of Internal Auditors (IIA) in collaboration with AuditBoard reveals compelling data on how internal audit departments that align their functions with overarching business strategies see remarkable benefits, particularly in funding allocation.

Key Findings and Trends

According to the 2025 North American Pulse of Internal Audit Survey, a striking difference in funding exists between internal audit functions that are fully aligned with strategic objectives and those that are not. The survey demonstrates that fully aligned internal audit functions enjoy a 31% higher likelihood of securing adequate funding compared to those with only partial alignment. This statistic underlines the critical role of strategic alignment in today’s audit environment.

Chief Audit Executives (CAEs) are becoming increasingly aware of the need to offer advisory services that correspond with strategic priorities. Currently, most internal audit activities consist of 75% assurance work and 25% advisory efforts. However, there's a significant drive among CAEs to increase the share of advisory services to 40%, reflecting a shift towards a more consultative role.

Anthony Pugliese, President and CEO of The IIA, emphasized, "Internal audit executives understand that closely aligning their activities with organizational goals allows them to play a more strategic role." This need for alignment coincides with the rapid evolution of technology, which is becoming integral to internal auditing processes to improve efficiency and effectiveness.

Growing Responsibilities and Technological Integration

Recent data indicates that nearly one-third of CAEs now oversee enterprise risk management (ERM), underscoring the expanded responsibilities of internal audit functions. Other key areas of responsibility highlighted in the survey include fraud risk management (47%), Sarbanes-Oxley compliance (36%), and ethics programs (33%).

The adoption of technology, particularly Generative AI (GenAI), is reshaping how audit activities are conducted, with the percentage of CAEs utilizing GenAI for internal audit skyrocketing from 15% to 40% year on year. Furthermore, a solid 90% of CAEs identify data analytics as essential for the profession’s future, underlining the importance of tech fluency in audit roles.

Staff Development Priorities

As the internal audit landscape evolves, so do the skill requirements. The survey reveals that over 75% of CAEs seek to enhance data analytics skills within their teams, while other areas of focus for staff development include communications (53%), cybersecurity (51%), and IT skills (46%). The continuous need for upskilling is crucial to address the demanding risk environment head-on.

Audit Planning Activism

The audit plans of many organizations highlight compliance, operational auditing, and financial reporting as primary focuses, with operational audits accounting for 19%, financial reporting at 16%, and compliance reviews at 14%. Additionally, a robust effort is directed towards cybersecurity and IT audits, showcasing a growing awareness of these areas' importance in overall risk management.

Outsourcing Trends

As duties continue to diversify, many organizations are turning to outsourcing to supplement their internal capabilities. Approximately 38% of organizations utilize outsourced services for cybersecurity, while 36% opt for IT, indicating a strong reliance on external resources for specialized skills and increased capacities.

The landscape of internal auditing is indeed changing, and CAEs face the challenge of adapting to these evolving responsibilities and risk environments. The findings from this report offer a comprehensive perspective on current audit operations, changes in priorities and planning, and the overarching need for aligning with strategic objectives. As the profession moves forward, it is evident that internal audit leaders are at a pivotal moment, positioning themselves to not only provide assurance but also to deliver added strategic value to their organizations.

For those interested, the full Pulse Survey report can be downloaded for an in-depth examination of these findings.

Conclusion

The insights drawn from the 2025 North American Pulse of Internal Audit Survey emphasize the necessity for internal audit functions to evolve their strategies and operations, thereby reinforcing their value and relevance in modern organizational structures. By staying aligned with their companies' strategic goals and leveraging technological advancements, internal audits can significantly enhance their impact on business success.