Between 2005 and 2023, I’ve seen the Public Expenditure and Financial Accountability (PEFA) program conducted over 500 national and subnational assessments offering a clear picture of how countries manage public finances. One key area that keeps getting overlooked. Internal Audit.
The findings are honestly concerning. A staggering 86 percent of these assessments showed that internal audit departments operate at only a basic or lower level. Only a tiny fraction (just 2%) managed to hit an “A” score, which signals that they are operating in line with international good practices.
This isn’t just a statistic. It reflects a broader challenge we’re still grappling with-one that touches directly on transparency, accountability, and how well governments manage taxpayer money.
What does “Basic” performance really mean?
When we talk about “basic” performance in PEFA terms, we’re talking about internal audit functions that are not independent, not following professional standards, or not operating with a clear plan. In many places, purely on compliance more than on performance, risk, or value for money.
And even when issues are flagged in internal audit reports, they often just sit on a shelf. No follow up. No correction. That’s a missed opportunity, and it can end up costing governments a lot.
Regional patterns i’ve noticed
No region is immune to weak internal audit systems, but some trends stand out.
Africa, for example, had the most assessments showing basic internal audit- 196 of them. Many countries there are still developing internal control systems, and internal audit often receives insufficient attention or resources.
But it’s not all bad news. In East and Central Asia, we saw some hopeful progress-8 assessments scoring an “A”. It’s modest, sure, but it shows that with right reforms, leadership, and investment, improvement is possible.
Why this really matters to me?
Internal audit is about more than checking boxes. It’s about making sure public money is used properly-about managing risks, improving systems, and building trust. When internal audit works the way it’s supposed to, it gives confidence not just to finance ministries, but to citizens and development partners as well.
Weak internal audit systems don’t just pose a technical issue-they raise fundamental questions about trust and integrity in public institutions.
So what’s holding us back?
From what I’ve seen and heard, the biggest issues include:
- Lack of independence: Auditors reporting to the same people they’re auditing? That’s never going to work.
- Limited capacity: Many internal audit staff haven’t been trained in risk-based or performance auditing. Some don’t even follow basic standards like the Institute of Internal Auditors (IIA) Standards or The International Organization of Supreme Audit Institutions (INTOSAI) Framework of Professional Pronouncements the (ISSAIs).
- Low political from leadership: Too often, internal audit is sometimes seen as a box-checking exercise rather than a tool for learning and improvement.
- Poor follow-up: Even when audits identify big issues, if there’s no system in place to act on then, what’s the point?
What we can-and should-do?
The World Bank and other development partners are stepping up to support countries in improving internal audit, and I’m proud that I and colleagues are part of this effort. But we need a shift in mindset—from compliance to value-adding oversight. Here’s what I think can help:
- Legislative and institutional reforms: Give internal audit the independence it needs, backed by law.
- Capacity development: Invest in people. Training, certification, and peer learning matter.
- Adoption of standards: International frameworks like the IIAs and ISSAIs provide a solid foundation.
- Digitization: Modern audit tools and data analytics tools can help audit teams work smarter and focus on what matters.
- Linkages with external oversight: Internal audit shouldn’t operate in isolation. Linking up with external auditors, anti-corruption agencies, and Legislative bodies can help turn reports into results.
My bottom line
These PEFA findings should be a wake-up call. Despite decades of PFM reforms, we’re still seeing internal audit treated as an afterthought in too many places. That needs to change.
Good internal audit isn’t a luxury—it’s a cornerstone of strong governance. And from what I’ve seen, countries that get this right are the ones that treat it as a long term investment.
At the World Bank, we’re trying to do our part-through diagnostics, policy dialogue, technical assistance, and financing. But ultimately, real change comes from within. It’s about national leadership taking ownership and setting internal audit up to succeed.
It’s time to raise the bar. We can’t afford not to.
The post Why internal audit still falls short—and what can be done to improve it? appeared first on Caribbean News Global.
