Agile Internal Audits: Bringing Speed and Flexibility to Financial Institutions

2/23/2026 - By Josh Strickland, CPA

Internal audit shouldn't feel like running the same race every year. Yet many financial institutions find themselves trapped in rigid annual cycles, checking the same boxes and reviewing the same areas regardless of how their institution has evolved or where new risks have emerged. This prescriptive approach becomes predictable and often misses the mark entirely, consuming valuable resources while failing to address the areas that matter most.

Today's banks operate in a fundamentally different environment than they did even five years ago. New fintech partnerships, evolving regulatory expectations, operational shifts, and emerging technologies create risks that traditional audit cycles simply weren't designed to capture. Meanwhile, areas that have been consistently clean for multiple years continue to receive the same level of scrutiny as emerging problem areas.

The solution isn't to abandon internal audit: it's to make it more agile. Agile internal audits move beyond prescriptive annual cycles to create risk-responsive, flexible programs that adapt to your institution's current reality. When done right, this approach ensures effective resource allocation, boosts efficiency, and reduces risk. 

Moving Beyond the Prescriptive Cycle: Risk-Based Audit Planning

The most effective internal audit functions are moving beyond the repeating of the legacy audit plan. Instead of defaulting to "last year's plan," forward-looking audit leaders are adopting a multi-year, risk-informed approach that leverages historical audit data to drive smarter, more strategic audit coverage decisions.

This shift hinges on a deeper analysis of audit history. For example, areas that have undergone multiple consecutive reviews with no material findings (and where there have been no significant operational or personnel changes) may be candidates for reduced audit frequency or a narrower scope. Conversely, processes with recurring deficiencies, heightened regulatory attention, or long gaps in coverage may demand increased scrutiny. This historical lens enables audit teams to identify systemic control strengths and latent vulnerabilities, ensuring audit resources are aligned with actual risk exposure.

Effective risk-based planning does not mean reducing overall oversight; it means optimizing it. The goal is to maintain comprehensive coverage across the control environment while recalibrating the depth and timing of audits based on evolving risk profiles. Institutions that adopt this model can redirect effort from low-risk areas to emerging risks, areas undergoing transformation, or functions that have historically flown under the radar.

Implementing this approach requires both analytical rigor and organizational resolve. It’s easy to default to familiar areas where audit processes are well established. However, true audit maturity lies in resisting that pull, using audit data, business intelligence, and strategic judgment to ensure that each engagement delivers meaningful insights, strengthens governance, and reinforces the institution’s risk posture.

Aligning Audit to Your Institution's Evolution

Effective internal audit functions stay closely attuned to the institution’s ongoing evolution. Risk is fluid, and audit teams must maintain regular dialogue with leadership to identify operational changes, strategic shifts, and emerging exposures as they arise.

A new fintech partnership, expanded product offering, recent regulatory development, or leadership turnover can introduce risk faster than legacy audit plans can adapt. The best audit teams ask: What’s changed? Where are new uncertainties emerging? What’s keeping leadership up at night?

These conversations force emerging risks to surface: material issues that demand attention regardless of prior audit cycles. Staying responsive doesn’t mean abandoning structure. It means recognizing that rigid plans miss moving targets. To be effective, audit programs must be dynamic, risk-informed, and embedded in the rhythm of institutional change.

Building a Culture That Values Internal Audit

Strong internal audit programs succeed when the organization views audit as a tool for performance, not just compliance. Culture determines whether findings lead to real improvements or end up ignored.

Audit earns credibility when it delivers clear value through cost savings, process improvements, or risk mitigation. When teams see that identifying control and operational gaps leads to solutions, not blame, they become more open and engaged.

It’s incumbent on leadership to set the tone here. When executives communicate that audit exists to strengthen the business, not penalize it, staff are more likely to collaborate and share information. The message becomes clear: it is better to uncover issues internally than wait for regulators to do it.

Of course, it goes without saying that this cultural shift takes time and continued reinforcement. People need to see that audit recommendations drive positive change, from eliminating inefficiencies to strengthening controls. Done right, over time, the audit function becomes a trusted advisor, not an outsider.

Common Pitfalls to Avoid in Internal Audit

Efforts to strengthen internal audit often fall short due to a few recurring missteps. Recognizing these pitfalls can help audit leaders avoid inefficiencies and ensure the function delivers meaningful value.

  • Equating More Audit with Better Audit

Increasing sample sizes or testing frequency does not automatically improve audit quality. If a process is already well-controlled, extensive testing may offer diminishing returns. A targeted approach that focuses on areas of genuine risk typically yields more actionable insights than broad testing of low-risk functions.

  • Disconnecting Risk Assessment from Audit Execution

Institutions often develop detailed risk matrices, assigning audit frequencies based on perceived risk levels. Yet in practice, those frequencies are frequently disregarded. If your risk assessment calls for annual review of an identified key area but that area hasn’t been audited in years, there’s a breakdown in either planning or follow-through.

  • Defaulting to Annual Audits Across the Board

Treating all audit areas as equally important defeats the purpose of risk-based planning. Not every function warrants annual scrutiny. Some areas, particularly those with low volatility or strong control histories, may be reviewed less frequently without increasing risk exposure.

Avoiding these pitfalls requires discipline and alignment. Internal audit programs must consistently link risk assessments to execution and resist the urge to over-audit or apply uniform schedules. Precision, not volume, is what ultimately drives audit value.

Building a More Agile Internal Audit Program

An agile internal audit program does not abandon structure or regulatory discipline. Rather, it takes a more strategic approach to resource allocation, enabling the function to respond to evolving risks while maintaining high standards of quality and control.

The starting point is a careful analysis of historical audit activity. Reviewing prior coverage and results helps identify recurring issues, sustained areas of strength, and potential blind spots. This insight should directly inform future planning, while leaving space to adjust as new risks emerge or operational realities shift.

Strong audit programs remain closely connected to the institution’s business activities. That means maintaining regular dialogue with senior management and department leaders to stay ahead of organizational changes, product developments, regulatory updates, and other factors that influence risk exposure. These conversations ensure audit priorities are based on current realities, not outdated assumptions.

Culture also plays a critical role. When internal audit consistently demonstrates value—whether by uncovering cost savings, enhancing operational efficiency, or strengthening controls—it earns credibility. This, in turn, encourages greater cooperation from staff and reinforces the auditor’s role as a partner in performance rather than a source of disruption.

Finally, agility should not be mistaken for constant change. The most effective programs maintain consistent quality standards, robust documentation, and disciplined execution, even as they shift their focus and methods to address changing risks. It is this balance—between structure and adaptability—that defines a truly agile audit function.

Transform Your Internal Audit Function with Saltmarsh

Embracing agile internal audits is more than a process shift: it’s a strategic evolution that positions the audit function as a driver of institutional performance. By aligning audit activities with current risks, organizational change, and regulatory expectations, institutions can move beyond static compliance and unlock deeper value.

Transitioning to this approach takes more than intent. It requires technical expertise, practical insight, and a clear understanding of both regulatory frameworks and day-to-day operational challenges. Saltmarsh’s Financial Institution team brings decades of experience helping banks and credit unions build audit programs that are both responsive and resilient.

We don’t just understand the rules: we understand how to design audit strategies that support growth, strengthen governance, and deliver measurable impact. Whether you’re refining an established audit function or building one from the ground up, our team is ready to support your next step.

Connect with us to explore how an agile internal audit program can help your institution manage risk more effectively, improve operational efficiency, and stay ahead of change.

Related Posts

Since 1944 Achieving Success by Contributing to the Success of Others