2024 Audit Focus Survey Identifies Cybersecurity and Tech as Urgent Concerns Amid AI Growth

The 2024 Global Digital Trust Insights survey has highlighted pressing concerns over cybersecurity and technological advancements as organizations increasingly adopt AI tools, all while revealing significant gaps in security measures and knowledge among executives.

Short Summary:

• The survey involved 3,876 executives, emphasizing the critical role of cybersecurity amid growing Generative AI usage.
• A substantial number of organizations are not fully equipped to manage the cybersecurity risks associated with AI.
• The audit sector is poised for digital transformation, yet faces challenges in talent acquisition and resource allocation.

The findings from the 2024 Global Digital Trust Insights survey, the longest-running annual report on cybersecurity trends, shed light on the urgent issues that executives face in safeguarding their organizations. Conducted between May and July 2023, the survey encompassed responses from 3,876 corporate leaders, including CEOs, CFOs, and CISOs, revealing a pressing narrative about the necessity of cybersecurity in today’s digital landscape.

Among the various insights, an alarming 40% of respondents hailed from large enterprises, specifically those with revenues exceeding $5 billion, while another 30% reported their companies generated more than $10 billion. The industries represented in the survey ranged widely, with industrial manufacturing and financial services each comprising 20% of the respondents, followed closely by tech, media, and telecom sectors at 19%, and retail at 17%.

The substantial global representation—executives from 71 countries participated, including strong showings from Western Europe (32%) and North America (28%)—confirms the survey’s relevance across diverse economic contexts. All this data serves to underline a critical theme: as organizations increasingly embrace advancements in technology, particularly AI, cybersecurity cannot be treated as an ancillary element but rather as a foundational component that requires robust attention and resources.

Tim Lietz, National Practice Leader for Risk & Compliance at Jefferson Wells, underscored the significance of this issue, stating,

“Technology and cybersecurity are more critical than ever as organizations navigate a rapidly evolving risk landscape.”

He further elaborated on how internal audit functions must evolve to address these challenges promptly and effectively. Indeed, despite cybersecurity being ranked as the foremost risk, the rise of generative AI poses an unwavering trend escalating in priority amongst internal audit leaders and committees.

Surprisingly, the report discovered that only 26% of organizations have fully integrated Generative AI standards into their governance frameworks, which indicates considerable opportunities for enhancing controls and oversight. This gap highlights a monumental challenge as business transformation and the adoption of IT necessitate a more profound expertise in several areas, including cybersecurity, data analytics, and IT audit. Consequently, 37% of organizations are considering an increase in staffing to meet the surge in demand for these specialized skills—a notable shift given that this marks the first major uptick in internal audit team expansion since 2020.

Within a context marked by political and economic uncertainty, companies are also grappling with changes in tax legislation and regulatory expectations. Although the current Congress has been relatively stagnant concerning tax reforms, prospects exist for essential changes to the Tax Cuts and Jobs Act (TCJA). Future tax bills may address modifications that have surfaced in discussions pertaining to Section 174, which concerns the treatment of research and development expenditures, and interest deductibility limitations.

Yet these overarching tax considerations don’t detract from the urgency surrounding cybersecurity and technological innovations as outlined in recent audits. The audit landscape is transforming rapidly, with professionals recognizing the indispensable role of advanced technologies like Generative AI in streamlining audit processes. According to the Thomson Reuters Institute’s 2024 Audit Survey, audit firms are acutely aware of the opportunities these technologies offer, enabling more efficient risk assessments and enhancing client collaboration.

Despite evident enthusiasm, audit professionals face significant hurdles, notably the talent shortage in managing cutting-edge technologies. The disparity in technology adoption rates between the United States and countries like the United Kingdom and Canada further compounds the problem, revealing a marked lag in integration efforts across the latter regions. This gap illustrates the need for actionable strategies to foster technological readiness while simultaneously addressing staffing shortages and financial constraints so vital for successful implementation.

Inclusion of generative AI in the audit process is becoming increasingly prevalent, with professionals identifying four major areas for its beneficial application: pre-engagement, planning, execution and fieldwork, and reporting and wrap-up. Yet, without necessary investments in education and upskilling, firms face daunting challenges in fully capturing the benefits these technologies offer.

Additionally, companies must remain vigilant to shifting regulatory environments that, as of 2023, include enhanced rules set forth by the SEC, particularly around cybersecurity risk management and disclosure requirements. The SEC’s focus on accountability amid high-impact enforcement reflects an evolving landscape where compliance is paramount. Audit committees are therefore encouraged to engage actively with management to evaluate not only their responses to regulatory guidance but also the wide-ranging implications various tax regulations may carry for their strategic objectives.

All these dynamics are set against a backdrop of escalating global cooperation regarding tax laws as multinational entities adapt to new standards like the 15% minimum tax rate established by the OECD and G20 nations. This collaborative effort to address tax challenges further emphasizes that organizations must remain attentive to evolving standards that can influence their operational and financial trajectories.

Ultimately, the results from the 2024 Global Digital Trust Insights survey and accompanying audits serve as both a caution and a guiding light for organizations navigating the complex waters of technological integration and cybersecurity enhancement. As leaders in various sectors begin to align their strategies with robust cybersecurity measures, those that proactively address skill gaps and resource challenges are likely to emerge as frontrunners in maintaining trust and securing stakeholder interests amidst a rapidly evolving landscape.

In conclusion, as we forge ahead into 2024, organizations must internally assess their readiness for technological transformation, particularly in terms of cybersecurity preparedness. With the dual forces of generative AI and evolving regulatory scrutiny at play, now is the time for businesses to prioritize resilient and capitalized audit functions that can safeguard against the multifaceted risks of today’s digital age.

Explore Jefferson Wells’ 2024 Internal Audit Priorities survey.