AuditBoard study reveals internal audit struggles in 2025

New research by AuditBoard highlights a misalignment between top risks and internal audit efforts within organisations.

AuditBoard has released findings from their report titled "2025 Focus on the Future: Inflection Point for Transformation at Mid-Decade", which sheds light on the disparity between the risks faced by businesses, particularly in the financial sector, and the resources allocated by internal audit teams to address these vulnerabilities.

The first half of the 2020s has been marked by continual disruptions caused by factors such as cybersecurity threats, advancements in AI, supply chain challenges, inflation, third-party risks, and sustainability concerns.

Despite this, internal audit leaders are grappling with the task of handling the growing number and speed of these risks with largely unchanged resource levels.

The report's survey exposes that internal audit leaders are missing crucial opportunities to optimise technology use, strategise, and foster cross-organisational collaboration, which is essential for addressing the imbalance between increasing risk demands and stagnant risk management capabilities.

One significant revelation from the survey is that while risks are escalating, resources are not following suit. Approximately three-quarters of the respondents anticipate that staffing levels will either decrease or remain the same in 2025. Past survey data mirror this trend, depicting overly optimistic staffing predictions followed by harsher realities.

The adoption of generative AI within internal audits has seen slow progress, with only 4% of respondents reporting significant advancement in its implementation. This slow uptake may hinder audit teams from reaping the benefits of AI, potentially leading to inefficiencies and a lag in keeping up with AI strategies.

Furthermore, the survey reveals a lack of preparedness for the upcoming deadline set by The Institute of Internal Auditors' Global Internal Audit Standards in January 2025, with at least one-third of organisations not being ready.

This underlines a potential underestimation of the importance of global internal auditing practices.

Cybersecurity remains a prominent concern, with 82% of internal auditors rating this risk as "very high" or "higher than average" for their organisations in 2025, maintaining its top position in planned audit efforts.

There are also ongoing discrepancies between risk levels and the alignment of audit efforts in various areas.

Although changing economic conditions are ranked as the second highest risk, they only rank eleventh in prioritised audit efforts. Conversely, fraud, while ranked tenth in risk, is third in terms of planned audit activities, indicating static perceptions of risk and resource distribution and highlighting areas where resource reallocation could occur.

Moreover, the data suggest immature perspectives on strategic planning and technology planning within internal audits. A significant 39% of respondents are not engaging in collaborative efforts with other governance, risk, and compliance teams for technology sharing, leading to issues such as disconnected data and audit fatigue.

Richard Chambers, AuditBoard's Senior Advisor, Risk and Audit, and former CEO of The Institute of Internal Auditors, remarked, "Our organisations have experienced a half-century's worth of disruption in half a decade."

"These are not ordinary times; extraordinary action is required. The internal audit profession is facing an inflection point. We must better equip ourselves to understand and face tomorrow's risks while deriving more benefits from limited resources. AuditBoard's 2025 Focus on the Future report offers hard lessons and points to vital opportunities on the path to transformation."

The findings stem from a survey created by AuditBoard, which collected responses from 376 internal audit professionals holding director-level positions or higher, spanning organisations in diverse industries across the United States, United Kingdom, and Ireland.

The survey was conducted from 8 August to 20 August 2024.