Transforming the Internal Audit Function (IAF): An Integrated MICMAC-ISM Approach for Unravelling the Relationship Among Challenges

Abstract

The transformation toward the use of data analytics requires overcoming many challenges. Nevertheless, the interconnections between the challenges are unclear. Gaining knowledge about these interconnections is important to prioritize strategies that aim to stimulate the transformation. This paper unravels the relationship among Audit Analytics (AA) implementation challenges to transform the Internal Audit Function (IAF) using Matrice d’Impacts Croisés Multiplication Appliqués à un Classement (MICMAC) – Interpretative Structural Modelling (ISM) (or MICMAC-ISM) to develop a hierarchical model and determine the relationships among the challenges and the degree of power of each challenge. We collect data from internal auditors experienced in using audit analytics. They suggest that cultural challenges, along with technical challenges, are critical for enabling transformation. Moreover, combinations of approaches are required to address the complex interrelationships among challenges to initiate transformation. The analysis suggests that AA implementation requires a top-down approach to address cultural challenges blended with a bottom-up strategy to overcome technical challenges.