The notion of internal audit as a "gotcha" or "veto" department is outdated. As the finance function increasingly takes on a strategic role, there "should be open dialogue" between internal audit, the CFO, and other key functions, said Mike Schor, U.S. internal audit market leader at Deloitte, "and there also needs to be collaboration."

"Of course, we must maintain independence and objectivity in all our work, but there are still ways for all parties to work together for the overall benefit of the enterprise," Schor said in an interview with CFO Dive.

The "brand reinvention" of internal audit

Schor has worked at Deloitte, one of the Big Four accounting firms, for 24 years, always within theinternal audit practice. He currently leads the firm's U.S. internal audit business and also serves as the global innovation leader for the function. According to relevant analysis, the core responsibility of an internal audit team is toevaluate an organization's internal controls, governance, and risk management frameworks. In his dual role, he spends much of his time thinking about "what the 'ideal state' of the modern internal audit function should be."

As companies increasingly rely on CFOs and finance teams for strategic insight, internal audit must evolve along the same path. Schor noted that today's internal audit teams cannot merely provide "assurance for compliance's sake," but should focus on anticipating key risks and becoming a trusted business advisor to finance leaders.

"We believe internal audit can act as a change agent, helping organizations adapt and adjust at a faster-than-usual pace," he said.

Therefore, internal audit must "more proactively communicate to the rest of the organization who it is, what approach it takes, why it does what it does, and how it can help the organization as a whole," Schor said.

This is almost like conducting "a marketing campaign or brand promotion—proactively approaching the CFO and saying, 'My team has these skills and capabilities, and we are focusing on the following matters,'" he added.

Securing a seat at the table on AI issues

Schor believes another major change affecting audit leaders is the increasing permeation of technology into the function.

As companies become more adept at using new tools and the data they enable, "the internal audit function must elevate its skills to master these capabilities, thereby achieving its ultimate goals more efficiently," Schor said.

When it comes to artificial intelligence (AI), internal audit must closely monitor how technology is changing daily processes while also being alert to the new risks it may introduce. Therefore, the function needs a "front-row seat" in how the organization conceives or deploys AI applications.

"When a company establishes an AI governance committee, or when a technology management group leads related initiatives, internal audit should have a seat at that table," he said. This does not mean internal audit participates as a voting member in decision-making or steers the company's strategic direction, but rather that it can stay informed in real time and provide insights and guidance.

"Internal audit often has a unique advantage of seeing across the entire enterprise—they might hear information in one meeting and immediately connect it to what another team is working on," Schor said. "I believe this is precisely the key positioning of the internal audit function at this stage."