Embracing Digital Transformation: The Evolving Role of Internal Audit in Saudi Arabia’s Technological Landscape
New KPMG Study Reveals the Impact of Digital Transformation on Internal Audit Practices in Saudi Arabia
In a groundbreaking study, KPMG has shed light on the significant influence of rapid digital transformation and technological advancements, especially in artificial intelligence (AI), on internal audit practices within Saudi Arabia. The report outlines the critical technology risks that internal auditors are now facing, including data privacy issues and regulatory compliance, amid the Kingdom’s swift embrace of digital innovation.
As organizations increasingly depend on big data, cloud computing, and AI, the protection of corporate and personal data against cyber threats has become more crucial than ever. Moreover, with new regulations mandating that Saudi-owned data be stored within national borders, internal auditors are at the forefront of ensuring compliance.
The advent of AI and open data platforms introduces further risks to data privacy, challenging auditors to deepen their understanding and develop effective mitigation strategies. Additionally, the fast-paced evolution of technological and business processes necessitates that internal auditors remain abreast of the latest developments to maintain effective control measures.
Shadi Abuserryeh, Head of Financial Risk Management at KPMG, highlighted the Kingdom’s rapid digital transformation, which compels internal audit functions to move away from traditional manual processes towards technology-driven approaches. "This shift is vital for adapting to the evolving business landscape and regulatory requirements, ensuring robust control environments," Abuserryeh remarked. He also noted the alignment of AI-powered controls with the Kingdom’s Vision 2030, which anticipates AI generating US$90 billion globally, with a growth rate of 45 percent.
The report emphasizes the transformative effect of technology on internal audit practices, presenting both challenges and opportunities. The extent of automation and its integration across operational frameworks have significantly altered core processes, a change that proved instrumental during the Covid-19 pandemic. The pandemic accelerated the adoption of remote audits, prompting organizations to integrate technology to streamline audit processes and minimize manual interventions. This has led to increased collaboration between internal audit, IT, and risk management units, enhancing the effectiveness of audit practices, with partnerships surging from 55% to 79% in 2020.
Moreover, the continuous development of technical skills among internal auditors is deemed essential to address emerging technology risks and leverage AI-powered solutions effectively. "Despite the hurdles, internal audit functions must evolve to keep pace with technological advancements," Abuserryeh added, urging business leaders to adopt innovative tools and strategies to mitigate risks and capitalize on opportunities, ensuring that internal audit remains a critical partner in organizational success.
The report also underscores the importance of continuous monitoring and real-time data analysis. With advancements in AI and machine learning, internal auditors are now empowered to revamp the practice by using data analytics to process larger data files faster and unlock pervasive insights on logical trends.
Looking ahead, the report emphasizes the need for internal auditors to embrace technology and adapt to the dynamic business environment. By leveraging mature IT infrastructures, robust governance frameworks, and advanced tools like data analytics, internal auditors can provide valuable insights and ensure organizational success, marking a new era in the field of internal auditing within the Kingdom.