Internal audit departments are making greater use of innovative technologies such as data visualization, according to a new report.

The report, from Deloitte Global, foresees an increase in dynamic reporting. The use of static text documents and presentations to communicate important information from internal auditors will decline as they rely more on dynamic visualization tools. Usage of such tools is expected to increase from 7 percent to 35 percent, according to the chief audit executives polled. The tools can generate visuals such as heat maps, bubble charts, interactive graphs and other representations of data that are easier for corporate executives and board members to understand.

“The overriding opportunity here is really the change imperative,” said Terry Hatherell, internal audit leader for Deloitte Global. “Reporting is absolutely one piece of the puzzle. Overall we have an environment where heads of internal audit are self-assessing that they’re don’t have the desired impact and influence. Only 28 percent indicated in our study they have a strong impact and influence, and of that, 16 percent also say they have little to no impact and influence. There’s clearly a change imperative and one of the ways we believe internal audit needs to change to have stronger impact and influence—and the study bore this out—is through reporting and engaging in communicating with stakeholders.”

Internal audit departments typically use text-heavy reporting, such as word processing documents and presentations, he noted. “Very few would use would use visualization, and what we’re seeing is a significant expectation of greater usage of visualization to report and engage with stakeholders,” said Hatherell. “That would be executives and management.”

A number of visualization technologies are being used by leading internal audit departments. “It’s the old adage: A picture is worth a thousand words, and it’s easier to draw insights and for stakeholders to comprehend internal audit’s perspective if these visualization tools are used,” said Hatherell. “A significant number of CAEs who responded to our survey indicated they expect to use visualization moving forward.”

The visualization tools allow the information to be much more interactive, so users can drill down to examine the data in greater detail.

“Visualization allows for the discussion with stakeholders and the reporting with stakeholders to be much more interactive,” said Hatherell. “In our view, it really changes the game. Heads of internal audit and internal audit departments use visualization techniques to engage with their auditees and stakeholders. It allows for additional insights to be drawn from what internal audit is reporting, and it really does allow internal audit to strengthen its impact and influence.”

However, many internal audit departments are lagging in the use of data analytics technology. While 86 percent of the chief audit executives who responded to Deloitte’s survey said they use analytics, only 24 percent employ analytics at an intermediate level and 7 percent at an advanced level. Two-thirds (66 percent) of the respondents admit they use basic, ad hoc analytics (such as spreadsheets) or no analytics at all.

Other trends are on the upswing, such as the use of alternative resourcing from within companies to supplement the work of the internal audit department. Over the next three to five years, the percentage of companies with formal rotation programs is expected to double, according to the survey respondents. The percentage with guest auditor programs will likely increase by 50 percent, and co-sourcing will increase as well.

“We believe that one of the root causes in internal audit not having significant impact and influence is a lack of skills and capabilities,” said Hatherell. “The research showed that less than half, only 41 percent, of the chief audit executives believe they have the skills and capabilities they need within their internal audit departments. We explored that further with the study participants. We asked them what models are they currently using to get the skills and capabilities that they need, and what do they expect to use over the coming three to five years? Not surprisingly, co-sourcing was the number one model that chief audit executives are currently using and expect to use moving forward to get the skills and capabilities they require.”

Two of the models that are expected to significantly increase in usage are the use of guest auditor programs and rotation programs, according to the survey. “Guest auditor programs are programs where chief audit executives would take someone from the business to work with internal audit to undertake one specific review,” said Hatherell. “For example, if they were undertaking a review of a financial process and it was a manufacturing organization, they may have someone come from another plant to work with internal audit in reviewing the financial processes in a different plant.”

A rotation program is much more formalized and longer in duration, he noted. “It may be 12 months, 18 months, 24 months,” said Hatherell. “This is where someone would come from the business and in effect work with the internal audit department for a fixed period of time up to typically two years and then would rotate back into the business. It’s a tremendous opportunity for internal audit to take advantage of business expertise and skills that exist in the business but also to help the organization strengthen its risk and control capabilities and competencies. That person who rotates back into the business typically is much more competent in risk and controls.”