Internal Audit Awareness Month, is a global initiative in May 2025, aimed at shining a light on the vital contributions of internal audit professionals. This month also raises awareness about the essential role internal audit plays in driving organisational resilience and success. Throughout May, the broader community will be encouraged to learn more about the profession, its standards and its impact on the broader business landscape. This month-long event provides an opportunity for organisations to highlight their internal audit functions, celebrate achievements and reaffirm their commitment to continuous improvement in governance and risk management.
Introduction
Internal audit plays a crucial role in safeguarding the integrity, efficiency, and effectiveness of organisations across both the public and private sectors, for profit and not-for-profit. As a profession dedicated to evaluating and improving an organisation’s risk management, control and governance processes, internal audit provides invaluable insights that help ensure compliance, transparency and accountability.
This article will discuss internal audit’s critical role, which serves as the Third Line of Defence and explore the key benefits it offers to organisations and stakeholders.
What is Internal Audit?
The definition of an internal audit is: An independent, objective assurance and advisory service designed to add value and improve an organization’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes.
This definition highlights the dual role of internal audit, assurance and advisory. As an assurance function, internal auditors provide objective assessments and/or evaluations of an organisation’s operations, systems, and controls. As an advisory function, they offer guidance on how to improve these systems, adding value through strategic recommendations that help drive performance.
Internal Audit as the Third Line of Defence
The Four Lines of Defence model is widely used to understand and implement organisational risk management and control frameworks.
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First Line of Defence (Operational Management): Operational managers are responsible for identifying, managing and mitigating risks in their daily activities. They are the first line in an organisation’s defence against risks and are tasked with ensuring that controls are properly designed and implemented.
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Second Line of Defence (Risk Management and Compliance Functions): The second line consists of risk management and compliance functions that support management in identifying and managing risks. These functions set policies, frameworks and processes to monitor and ensure the organisation is operating within legal and regulatory boundaries. They monitor and have oversight of the First Line of Defence.
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Third Line of Defence (Internal Audit): Internal audit is the Third Line of Defence, providing independent assurance that the organisation's risk management processes and internal controls are operating effectively. This role is critical in helping organisations identify, assess and mitigate risks. Internal audit offers a bird’s-eye view of organisational activities, allowing it to assess whether management’s risk control measures are effective and whether the organisation’s overall governance framework is sound. It also provides insights into potential vulnerabilities that could undermine the organisation’s long-term goals and sustainability. Internal audit reports directly to the Audit Committee or Those Charged with Governance such as the Board, or Council ensuring objectivity and impartiality. The function evaluates the effectiveness of governance processes, risk management and internal controls and ensures that the first and second lines of defence are operating as intended.
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Fourth Line of Defence (External Audit/ Regulator): External audit/ regulator is the fourth and final line of defence, providing independent assurance that the organisation's risk management processes and internal controls are operating effectively. External audit/ regulator reports directly to the Audit Committee or Those Charged with Governance ensuring objectivity and impartiality. The function evaluates the effectiveness of governance processes, risk management and internal controls, and ensures that the first, second and third lines of defence are operating as intended. This line of defence could include the ASIC financial auditor, legislated auditor such as Auditor General and/or Regulator.
Benefits of Internal Audit
Internal audit’s position as the Third Line of Defence offers several significant benefits for organisations in both the private and public sectors.
1. Enhanced Risk Management
Internal audit helps organisations identify and assess risks across all areas, from financial operations to compliance with legal requirements. This proactive approach allows management to address issues before they escalate, leading to better risk mitigation strategies.
2. Improved Governance
Good governance is fundamental to organisational success. Internal audit helps ensure that an organisation’s governance frameworks, policies and procedures and decision-making processes are transparent, accountable and in line with legislation and better practice. It assists those charged with governance in fulfilling their oversight responsibilities effectively.
3. Objective Assurance
Internal auditors provide independent assurance to management and those charged with governance about the reliability and effectiveness of internal controls. This helps strengthen stakeholder confidence and ensures that management is fulfilling its duties to safeguard assets and ensure compliance.
4. Operational Efficiency
By reviewing processes, internal audit can uncover inefficiencies and recommend improvements. They assess whether resources are being used effectively and recommend ways to enhance long-term sustainability. Streamlining operations and eliminating unnecessary procedures can lead to cost savings and improved financial performance, improved productivity and better use of organisational resources.
5. Compliance and Regulatory Adherence
Internal audit ensures that the organisation has efficient and effective processes to adhere to relevant laws, regulations, and industry standards, helping to prevent fines, legal repercussions and reputational damage.
6. Improved Internal Controls
An internal audit provides detailed assessments of internal controls to identify weaknesses or gaps. By addressing these weaknesses and/or gaps, organisations can mitigate the risk of fraud, mismanagement and financial irregularities, which is particularly important in both private and public sectors where transparency and accountability are paramount.
7. Strategic Guidance
Internal auditors bring specialised expertise to the table, offering strategic advice that help organisations stay aligned with their strategic goals.
8. Audit Ready or Regulator Ready
Internal audit can assist organisations to be audit ready or regulator ready. Internal audit can perform an audit and provide the improvement opportunities to those charged with governance for consideration and implementation prior to the external audit or regulator audit/review. Internal audit recommendations are not made public which preserves the integrity of the organisation. External audit or regulator findings can sometimes be public impacting the integrity of the organisation and the way the public and stakeholders perceive the organisation.
Internal Audit Services Offered by Moore Australia
Moore Australia, as a global and leading accounting and advisory firm, offers a comprehensive range of internal audit services designed to support both private and public sector clients. These services are tailored to meet the unique needs of each organisation and can help enhance governance, mitigate risks and improve overall operational efficiency. Some of the key internal audit services offered by Moore Australia include:
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Strategic Internal Audit Planning: Moore Australia assists clients in developing a strategic internal audit plan aligned with their business objectives, risk profiles and regulatory obligations. The team works closely with senior management to create a roadmap that ensures internal audit activities are focused on areas of highest risk and value, recognising the current assurance activities within the organisation, optimising resource allocation and improving overall audit efficiency and effectiveness.
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Risk Assurance Mapping: As part of their risk management services, Moore Australia offers risk assurance mapping to identify and assess the most critical risks facing your organisation. This process involves evaluating existing controls, identifying potential gaps and mapping out the various current assurance functions within the organisation. The result is a clear, comprehensive view of how risks are managed across the organisation, helping you strengthen your internal control environment and prioritise future assurance activities, such as internal audit.
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Internal Audit Reviews and Assurance: By conducting thorough internal audits, Moore Australiaare able to evaluate the efficiency and effectiveness of your internal controls, risk management processes and governance frameworks. Their independent assessments provide objective assurance and offer long lasting value and recommendations for improvement.
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Governance and Control Consulting: Moore Australia’s internal audit professionals work with clients to strengthen their governance frameworks, processes and internal controls. This all helps to ensure that organisations remain compliant and operate with transparency, accountability and perform ethical decision making.
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Risk Management and Compliance Consulting: Moore Australia experts can help design, develop and implement robust risk management frameworks, policies and procedures that align with international standards and regulations. We can also provide compliance consulting and training to ensure organisations meet their legal and regulatory obligations.
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Fraud and Forensic Investigations: Moore Australia assists in investigating allegations of fraud or misconduct within an organisation. Our forensic experts use advanced techniques to detect fraud, assess its impact, and recommend strategies for prevention.
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IT Audits and Assessments: With increasing reliance on technology, Moore Australia offers specialised IT internal audit and assessment services, to identify vulnerabilities in an organisation’s IT systems and ensure that data is secure and protected.
Conclusion
Internal audit plays a critical role in helping organisations navigate the complexities of modern risk and governance landscapes. As the Third Line of Defence, internal audit provides critical oversight and independent assurance, ensuring that organisations operate effectively and ethically.
Internal Audit Awareness Month provides a valuable opportunity for organisations to recognise the importance of this function. For clients in both the public and private sectors, partnering with Moore Australia can enhance their internal audit capabilities and provide expert guidance on how to strengthen risk management, governance and compliance frameworks.
As we move through 2025, the role of internal audit will continue to evolve and organisations will increasingly rely on the expertise of internal auditors to navigate the challenges of an ever-changing business environment.