In the face of dynamic economic transformation and regulatory evolution, the role of internal audit firm functions in Saudi Arabia has expanded far beyond traditional compliance checkpoints. As the Kingdom accelerates toward its Vision 2030 goals, audit practices must adapt to a rapidly shifting risk landscape encompassing digital risk, governance expectations, and strategic transformation. Insights Advisory highlights that in this context, internal audit evolves from a support function into a strategic business partner offering forward-looking assurance, risk intelligence, and governance insights that enable sustainable growth in 2025 and 2026.
Contemporary Saudi business environments require internal audit teams, especially those partnered with an internal audit firm, to provide deeper, data-driven insights on risk exposure and safeguard organizational resilience. According to the Protiviti and IIA KSA survey, while 53% of organizations feel confident in identifying risks, only 29 incorporate digital innovation risk into audit plans and 26 lack in-house IT audit expertise, underscoring a pressing need for audit maturity transformation.
The Strategic Evolution of Internal Audit in Saudi Arabia
From Compliance Function to Value Creator
Historically, internal audit focused on verifying financial integrity and regulatory adherence, but the modern risk environment demands much more. Beyond traditional audit activities, internal audit firms are now expected to act as strategic risk partners that anticipate future challenges, inform strategic priorities, and integrate audit insights across enterprise risk management (ERM) frameworks.
The Kingdom’s regulatory landscape is also evolving. The OECD Corporate Governance Factbook 2025 reports that the Capital Market Authority now mandates internal audit units, audit plans, and reporting for listed entities, elevating the internal audit’s role in protecting stakeholder interests and enhancing corporate governance.
This shift aligns with a broader global trend but carries particular significance in Saudi Arabia, where large-scale initiatives and giga-projects depend on robust governance and risk oversight. Organizations increasingly view internal audit as essential for evaluating strategic risk, operational efficiency, and compliance readiness across sectors undergoing rapid transformation.
Navigating Emerging Risks in 2025 and Beyond
Rising Technological and Cybersecurity Risks
One of the most consequential shifts impacting internal audit is the rise of technology-driven risk. Saudi Arabia’s digital transformation, propelled by AI, cloud computing, and big data adoption, has introduced complex risk vectors that require auditors to develop advanced capabilities. A KPMG study highlights that data privacy concerns and AI-related risks necessitate stronger control environments and continuous monitoring.
Moreover, cyber risk now tops the priority list for many Saudi CEOs, with roughly 49% of leaders identifying high or very high exposure to cyber threats a dramatic increase from previous years. This reality positions internal audit as a critical evaluator of cyber risk governance, challenging auditors to assess not only technical defenses but also incident response readiness, ethical data use, and alignment with national cybersecurity frameworks.
Economic and Operational Risk Dynamics
Economic conditions and geopolitical uncertainties also influence the internal audit agenda. While the IMF projects economic growth of approximately three to four percent for 2025 and 2026, slower oil rebounds and global volatility highlight the importance of resilient enterprise risk strategies.
Within this context, internal audit firms are expected to provide assurance on risk frameworks that address liquidity risk, supply chain disruptions, and strategic business continuity scenarios. Internal audit’s ability to quantify risk exposure and recommend mitigation strategies becomes a value-driver for boards and executive leadership.
Enhancing Governance and Stakeholder Confidence
Strengthened Corporate Frameworks
Governance reforms in Saudi Arabia have emphasized transparency and accountability. New corporate rules requiring beneficial ownership disclosure and enhanced governance practices reflect broader efforts to elevate investor trust. Internal audit plays a pivotal role in ensuring compliance with these reforms, offering independent validation that processes and controls meet regulatory standards.
Within this governance framework, internal audit firms are increasingly involved in assessing board-level risk reporting mechanisms, audit committee effectiveness, and strategic alignment of organizational controls. By delivering clear, forward-looking insight into governance effectiveness, internal audit contributes to more informed decision-making and improved strategic alignment.
Corporate Governance Impact
Data from the OECD Corporate Governance Factbook shows that internal audit appointments and oversight have been strengthened through mandatory audit committee interactions, which enhance audit independence and accountability. These enhancements position internal audit as a custodian of governance integrity, fostering confidence among investors, regulators, and business stakeholders.
Organizations that strengthen their audit functions enhance their market reputations and reduce the likelihood of costly regulatory penalties or operational failures. For instance, listed companies on the Tadawul Saudi Stock Exchange, with a market capitalization in October 2025 near 9 point six trillion Saudi riyals, benefit from robust audit oversight as they face increased investor scrutiny.
Internal Audit’s Role in Digital Transformation and Analytics
Adoption of Advanced Tools and Techniques
As organizations adopt digital processes, internal audit must keep pace with advanced technologies like AI and continuous auditing tools that enable real-time risk insights. Continuous auditing, as discussed in recent audit technique literature, supports enhanced anomaly detection and proactive risk mitigation, evidenced by rapid growth in analytics investment and fraud detection markets valued around four hundred seventy million dollars in 2025.
AI-enabled analytics and robotic process automation are reshaping how audits are conducted, enabling internal audit professionals to analyze entire data sets rather than sample tests. This real-time perspective allows audit teams to generate faster, more actionable insights that anticipate rather than react to emerging risks.
Integration with Enterprise Risk Management
Internal audit’s integration with ERM frameworks strengthens risk coverage and ensures audit plans address the most significant organizational challenges. Surveys indicate that about sixty three of organizations engage senior leadership in risk prioritization processes, reflecting a maturation of strategic risk culture supported by internal audit oversight.
This integration ensures that internal audit not only identifies control weaknesses but also evaluates how strategic risks are managed across enterprise functions, aligning audit coverage with organizational risk appetites and strategic objectives.
Talent, Skills, and Future Readiness
Building a Skilled Audit Workforce
The complexity of today’s risk environment demands that internal auditors possess more than technical accounting skills. Strategic thinking, digital literacy, and risk foresight are now essential competencies. Organizations are investing in continuous learning and specialized training to bridge these gaps, fostering diverse audit teams that can handle risks ranging from cybersecurity to ESG reporting.
Internal audit firms play a central role in upskilling internal teams and providing supplemental expertise when in-house capabilities are limited. These partnerships enhance audit quality and ensure organizations remain agile in addressing new challenges.
Balancing Independence and Advisory
While internal audit functions increasingly deliver advisory insights, maintaining independence is critical to preserving trust. Clear charters, governance protocols, and audit committee oversight help ensure that internal audit retains objectivity while contributing strategic guidance on risk and control.
This balance enables internal audit to serve as both a trusted advisor and a guardian of control integrity, a dual role that is essential in a complex risk ecosystem.
Enabling Resilient and Strategic Organizations
In Saudi Arabia’s evolving risk landscape, the internal audit firm function is no longer confined to compliance checks or control testing. Instead, it has become a strategic enabler that delivers deep, actionable insights capable of guiding organizational strategy, strengthening governance, and fostering resilience against emerging risks. Insights Advisory emphasizes that effective internal audit transformation requires robust digital capabilities, enhanced governance frameworks, and strategic talent development aligned with Vision 2030 aspirations.
As economic transformation continues in 2025 and 2026, internal audit will play a vital role in helping organizations anticipate risk, protect stakeholder value, and enhance decision-making. By leveraging sophisticated analytics, aligning with enterprise risk management, and maintaining independence while offering advisory insights, internal audit functions are positioned to drive sustainable growth and strengthen governance across the Kingdom. Insights Advisory concludes that internal audit’s evolving role ensures that Saudi organizations remain resilient and competitive in an increasingly uncertain global business environment.
Finance Advisory 