Building an internal audit function is about much more than establishing policies, developing audit plans, or hiring qualified professionals. It requires creating a function that can evolve alongside the organization, provide meaningful assurance to leadership, and establish credibility across diverse business operations.

Over more than 25 years in internal audit and risk management, including 14 years leading the audit function of a diversified, publicly traded holding company, I have seen how the role of internal audit must adapt as businesses grow, transform, and become more complex.

The challenge is not simply building an audit department. It is building a function that remains relevant as the organization changes around it.

1. Start With the Business, Not the Audit Plan

One of the most important considerations when establishing an internal audit function is understanding the organization before defining how it will be audited.

Business strategy, operating models, financial structures, regulatory obligations, and management priorities all influence the risks an organization faces.

An audit methodology that works well for a centralized business may be entirely inappropriate for a diversified enterprise with multiple operating subsidiaries.

Effective internal audit functions begin with a clear understanding of how the business creates value, where that value may be vulnerable, and how assurance can support organizational objectives.

The audit plan should be the outcome of that understanding—not the starting point.

2. Balance Consistency With Operational Flexibility

As organizations expand, internal audit leaders face a difficult balancing act.

Corporate leadership and audit committees need consistency in risk assessment, reporting, and assurance standards. Individual businesses, however, may operate under very different processes, technologies, regulatory environments, and management structures.

Establishing audit capabilities across more than a dozen operating subsidiaries reinforced the importance of developing a common framework without imposing a one-size-fits-all approach.

The objective is to create consistency in expectations while allowing flexibility in execution.

A well-designed internal audit function should provide enterprise-wide visibility without losing sight of the realities of individual businesses.

3. Establish Credibility Before Expecting Influence

Internal audit's authority may be established through its charter and reporting relationships, but its influence must be earned.

That credibility comes from understanding the business, exercising sound judgment, and delivering observations that management recognizes as relevant and actionable.

Audit leaders must be willing to challenge established practices while maintaining constructive relationships with the people responsible for operating the business.

This is particularly important when building a function from the ground up, where internal audit may initially be viewed as an additional layer of oversight rather than a source of organizational value.

The goal is not to eliminate that tension entirely. Independence requires the ability to challenge management when necessary.

The goal is to ensure that those challenges are informed, fair, and focused on improving the organization.

4. Treat Transformation as a Continuous Risk

Organizational transformation introduces opportunities for growth, efficiency, and innovation. It also creates periods of heightened risk.

Acquisitions, divestitures, technology implementations, and changes in organizational structure can alter control environments faster than traditional assurance processes can respond.

Major enterprise resource planning implementations, for example, require more than evaluating whether a new system functions as intended. They involve changes to data integrity, financial reporting, access controls, business processes, and accountability.

Similarly, acquisitions can introduce unfamiliar operating models and control practices that must be understood and integrated into the broader governance framework.

Internal audit should be engaged early enough to identify emerging vulnerabilities, while maintaining the independence necessary to evaluate outcomes objectively.

5. Build for the Organization You Are Becoming

Perhaps the most important lesson in developing an internal audit function is recognizing that its initial structure should not define its future capabilities.

As businesses grow, the audit function must continually reassess its talent, technology, methodology, and operating model.

Capabilities that were sufficient for a smaller organization may become inadequate as operations expand internationally, business models diversify, or regulatory expectations increase.

Today, advances in data analytics and artificial intelligence create additional opportunities to improve risk identification, expand audit coverage, and deliver more timely assurance.

However, technology alone does not create an effective audit function.

The foundation remains a combination of professional judgment, organizational understanding, independence, and the ability to translate complex risks into meaningful insights.

The Enduring Value of Internal Audit

A successful internal audit function is not defined by the number of audits completed, the volume of findings reported, or the sophistication of its methodology.

Its value is demonstrated through the confidence it provides to boards and management, the quality of its insights, and its ability to remain relevant as organizational risks evolve.

Building that capability takes time, persistence, and a willingness to adapt.

The ultimate objective is not simply to build an internal audit function that serves the organization as it exists today, but to establish one capable of supporting the organization it will become tomorrow.