Internal Audit Risks You Must Address in 2026

 

Internal Audit Services

As Saudi organisations prepare for a year of rapid transformation and increased scrutiny, internal audit leaders must reassess priorities and sharpen their assurance coverage. Boards and executives now expect internal audit to move from a compliance checker to a strategic partner that helps unlock value while protecting the enterprise. This article outlines the highest priority risks that internal audit teams in the Kingdom should address in 2026 and provides practical steps to close gaps. Note that many organisations will benefit from external support such as consultant internal audit and from market specialists among Advisory Companies in Saudi Arabia to accelerate capability building.

Why 2026 is different for internal audit in the Kingdom

Saudi Arabia is moving through a phase of faster economic expansion and major structural change. The International Monetary Fund revised Saudi real GDP growth for 2025 to about four percent reflecting stronger oil output and resilient non oil activity. That momentum means more deals, more projects and more third party relationships to oversee. At the same time, regulators and investors expect stronger governance and clearer assurance on strategic initiatives linked to Vision 2030. Internal audit must therefore pivot to risk intelligence and scaled assurance rather than only testing controls.

Top internal audit risks for 2026

Cybersecurity and resilience

Cybersecurity remains the single most cited top risk for internal audit leaders across the region. The scale and sophistication of attacks are increasing while organisations adopt cloud and digital platforms at pace. Internal audit needs to verify not only technical controls but also incident response readiness, board level reporting and cyber third party governance. Practical steps include risk based cyber assurance programs, crisis simulation testing and continuous monitoring of privileged access.

One recent industry survey of chief audit executives reinforced that cyber and data privacy are among internal audit top priorities for 2025 and carry into 2026. That means auditors must refresh skill sets and tooling to provide meaningful assurance.

Talent and skills gaps

Finding and retaining audit talent with data analytics and technology assurance skills is a persistent challenge. Many internal audit functions report shortages in cyber auditing, data science and risk oriented audit planning. To respond, internal audit should adopt blended resourcing models that combine internal development, targeted hiring and specialist partnerships. Organisations often engage consultant internal audit teams temporarily to build momentum on complex reviews and to transfer skills to internal staff.

Quantitative indicator for planning: benchmark internal audit headcount to enterprise revenue or to a risk adjusted assurance square. In the Middle East recent benchmarking shows wide variance but many larger firms target internal audit resourcing that equals roughly 0.08 to 0.12 percent of revenue for a full featured function. Where resourcing falls below these ranges, consider managed services and targeted upskilling.

Third party and supply chain risk

As outsourcing and partnerships expand to deliver new Vision 2030 projects, third party risk increases. This includes operational continuity, data sharing and concentration exposure where too much reliance exists on a single supplier. Internal audit should map critical third parties, test contractual controls, and examine contingency plans. Where risk is elevated, conduct deeper assurance on vendor risk management and contractual SLAs.

Industry surveys show supply chain and third party risk climbing in the priority lists for audit leaders and boards, reflecting the interconnected nature of modern business models.

Regulatory and compliance change

Regulation in Saudi Arabia is evolving rapidly across capital markets, data protection, tax and anti money laundering. Audit committees expect internal audit to interpret regulatory change, assess compliance readiness and confirm that governance processes track new obligations. Internal audit must also support management with implementation assurance for new laws and regulatory expectations. Use a regulatory change register and a rolling assurance schedule to avoid surprises.

KPMG and other advisory firms note heightened audit committee attention on regulatory readiness and on audit quality in 2025 and 2026. This trend will demand more documented evidence of management remediation progress and clearer escalation protocols.

Fraud and financial integrity

Rapid growth and complex transactions can increase fraud risk. Internal auditors should adopt data driven fraud detection, continuous auditing of high risk transactions and targeted deep dives into areas such as procurement, revenue recognition and expense reimbursement. Integrating behavioural analytics and transaction monitoring can surface anomalous patterns before they crystallise into loss.

Strategic execution risk

Large strategic programs and public private partnerships create execution risk. Internal audit must expand beyond compliance to provide assurance on program governance, benefit realisation and milestone integrity. The role requires early engagement with program sponsors and the use of a risk based audit approach to follow funds, timelines and outcomes.

Practical steps to strengthen internal audit coverage in 2026

Reprioritise to risk based audit plans

Move from an annual static plan to a dynamic risk oriented plan that is refreshed quarterly. Use heat maps and scenario analysis to align audits to enterprise critical risks. Apply deeper testing on exposure areas and lighter touch assurance where residual risk is low.

Build analytics first workflows

Invest in audit analytics and continuous monitoring to detect control drift. Replace manual sampling with automated queries for exception reporting. Upskill the team so auditors can design analytics and interpret results meaningfully for the business.

Partner with external specialists

Where internal skills are insufficient, temporary engagement with consultant internal audit teams or niche advisory firms can accelerate capability building. Advisory Companies in Saudi Arabia offer tailored services to stand up cyber assurance, third party reviews and program audits while enabling knowledge transfer to internal teams.

Improve reporting to the board and audit committee

Deliver concise insights that link findings to strategy and financial impact. Use risk scoring and trend analysis to make escalation decisions transparent. Focus on root cause actions and timelines rather than only on control failures.

Integrate ESG and sustainability assurance

As sustainability reporting gains traction, internal audit should evaluate data quality, metric governance and controls around ESG disclosures. Assurance here protects reputation and investor confidence just as much as controls protect financial outcomes.

Measuring success with quantitative metrics

Effective internal audit functions define metrics that matter. Examples include percentage of high risk audit findings remediated within agreed timelines, number of continuous monitoring rules in production, percentage coverage of critical third parties, and staff utilization rates for technology enabled activities. Use benchmarking data where available. For context many Middle East functions reported a rise in technology enabled assurance coverage in 2025 and have set targets to increase automation by at least 30 percent in the following 12 months.

Roadmap for the first 90 days of 2026

1. Update the risk assessment with fresh inputs from the business and external intelligence.

2. Reallocate audit hours to high risk areas identified in the updated assessment.

3. Launch quick wins such as a continuous monitoring proof of concept on procurement and payroll.

4. Engage a consultant internal audit resource to close immediate capability gaps and to train staff.

5. Prepare a targeted briefing for the audit committee that links audit priorities to strategic risks and to financial exposures.

The role of governance and culture

Audit can only add value when management and the board treat assurance as an enabler of risk aware decision making. Strengthen the tone from the top, make reporting transparent and reward controls oriented behaviours. Internal audit should also assess culture and ethical behaviour as leading indicators of control effectiveness.

Bringing it together for Saudi organisations

Saudi organisations face both opportunity and complexity as Vision 2030 initiatives scale and as the economy grows. The IMF and other global agencies expect continued expansion which will bring more projects and partnerships to manage. Internal audit must therefore operate with a dual focus on protection and value enablement. Where internal capabilities are limited, working with established Advisory Companies in Saudi Arabia can provide pragmatic acceleration while leaving lasting skills inside the business.

If your organisation needs independent assurance that aligns to strategic priorities and regulatory expectations contact insight advisory for a targeted readiness assessment. Insight advisory can help design a risk oriented internal audit plan, implement analytics based auditing and provide specialist assurance on cyber and third party risk. Taking decisive steps now will strengthen governance, protect value and enable confident growth in 2026.

Closing thoughts

The next 12 months will test whether internal audit functions can evolve fast enough to meet higher expectations. Prioritise cyber resilience, talent, third party risk and regulatory readiness. Use data, partner where needed and focus audit effort where it reduces the largest residual risk. With the right plan and the right partners including consultant internal audit resources and trusted Advisory Companies in Saudi Arabia, internal audit can be a powerful force for assurance and for strategic value creation in 2026.