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Internal audit plays a critical role in corporate governance, yet many boards still underutilize it. In a recent episode of the The Public Company Series podcast, experts from the Institute of Internal Auditors (IIA) unpack how internal audit functions can evolve from a compliance-focused role into a strategic partner for boards.
Featuring Carey Blakeman, Benito Ybarra, and Mike Varney, the conversation highlights a clear theme: organizations that fully engage in internal audit gain stronger oversight, better risk visibility, and more informed decision-making.
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Internal Audit is More Than Compliance
Many organizations still view internal audit as a function focused primarily on compliance and financial controls. While that remains part of the role, it only scratches the surface.
As Benito Ybarra, Executive VP of Global Standards, Guidance, and Certifications at IIA, explains, internal audit provides much broader value. “Internal auditors can really help provide valuable information to the governing bodies with regard to how things operate, the maturity of the function, and the risks that are evident in the organization.”
Because internal auditors assess both individual functions and cross-functional processes, they often understand how the organization truly operates better than many executives. That perspective allows them to identify risks that might otherwise go unnoticed.
Still, many boards fail to bring internal audit into strategic discussions. Ybarra notes that internal audit is “not always invited to those meetings,” which limits its ability to contribute where it matters most.
A Clearer Definition: Risk, Insight, and Support
So what does internal audit actually do in practice?
Mike Varney, past chair of the Institute’s North American Board and a partner at Crowe, offered a simple, effective explanation: “I help organizations identify risks to meeting their strategic goals, and then how they can help mitigate those risks.”
That definition highlights two essential elements:
- Risk identification: Understanding what could prevent the organization from achieving its objectives
- Support and mitigation: Helping management put controls and processes in place to address those risks
Importantly, internal audit does not act as a “cop on the block.” Instead, it operates as a partner to the business. Varney emphasizes this mindset shift, noting that internal audits should focus on “how can we help” rather than simply policing behavior.
Independence and Reporting Structure Matter
For internal audit to deliver real value, it must operate independently from management.
According to IIA standards, the internal audit function should report to the board, typically through the audit committee, with a dotted line to the CEO. This structure ensures auditors can access the information they need and raise concerns without interference.
Ybarra underscored why this matters. “In order to really produce the work that we need to, we need to have access to the people, the data, the report, the facility, everything that we need.”
When internal audit sits too low in the organization, its perspective narrows and its effectiveness declines. Boards must ensure the function is properly positioned and resourced to provide meaningful oversight.
From Watchdog to Strategic Advisor
One of the most important takeaways from the discussion is the need to redefine how organizations view internal audit.
Too often, companies see auditors as watchdogs. In fact, nearly half of survey respondents in the IIA’s Vision 2035 research still hold that perception. But that mindset limits the function’s potential.
As Ybarra points out: “If you’re just focused on compliance work…we can easily be replaced.”
To remain relevant, internal audit must evolve. That means:
- Expanding into advisory and strategic roles
- Engaging earlier in decision-making processes
- Aligning audit plans with enterprise risk and business strategy
When internal audit connects its work to strategic priorities, organizations see tangible benefits.
The Growing Role of Internal Audit in AI and Emerging Risks
As organizations face new and complex risks, internal audit’s role continues to expand. Topics like AI, cybersecurity, and sustainability now sit squarely within the board’s oversight responsibilities.
AI, in particular, presents both opportunity and risk. Ybarra describes it as “definitely a disruptor” that many organizations deploy without sufficient governance.
Internal audit plays a dual role here:
- Evaluating how the organization uses AI
- Adopting AI tools to improve audit efficiency and insight
Varney highlights this balancing act. “It kind of makes us go down two paths…how do we use it…[and] how is our organization applying and implementing AI?”
With pressure mounting to adopt AI quickly, internal audit helps ensure organizations implement these tools in a structured, governed way rather than cutting corners.
Building Stronger Board Relationships
Ultimately, the effectiveness of internal audit depends on its relationship with the board.
Blakeman, IIA Director of Corporate Governance Engagement, emphasizes that boards must actively engage with internal audit teams, not just review reports. Strong relationships improve communication, trust, and outcomes.
She notes many organizations still need improvement in this area, with about 45% of stakeholders saying they require greater board support.
She shares one simple but powerful step: Spend time with the audit team. “They meet the people doing the work, and they really get a lot of value out of that,” Blakeman says.
Elevating Internal Audit for Better Governance
Internal audit is no longer just a back-office function. When properly positioned, it becomes a strategic asset that strengthens governance, sharpens risk oversight, and supports better decision-making.
For boards, the takeaway is clear: engage internal audit early, often, and meaningfully. Organizations that do will gain a clearer view of risk, and a stronger path forward.
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About The Author
- Ben Blanc is the Brand Narrative Manager at OnBoard, where he shapes the company's public voice across social media, live programming, and external communications. With 18+ years of experience spanning media, operations, and marketing, he brings a blend of storytelling instinct and editorial discipline to B2B SaaS. Ben has spent his career turning complex ideas into clear, accessible, and actionable narratives. At OnBoard, his focus is on thought leadership grounded in real customer proof, credible perspective, and content worth paying attention to.
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