The Role of Internal Auditing in Ensuring Organizational Compliance With Governance and Regulatory Standards

Posted: Sep 05, 2023

• Sawyer Brooks
• Damien Bell
• Penelope Hughes

Abstract

The contemporary business environment presents unprecedented challenges for organizational compliance with governance and regulatory standards. Traditional internal auditing methodologies, while effective in stable regulatory contexts, increasingly demonstrate limitations in addressing the dynamic complexity of modern regulatory frameworks. This research introduces a transformative approach to internal auditing that leverages computational innovations to enhance organizational compliance assurance. Our research addresses critical gaps in current auditing practices by developing a computational framework that integrates quantum-inspired optimization with advanced natural language processing. This integration enables the system to process and analyze compliance-related information across multiple dimensions simultaneously, transcending the linear analytical approaches that characterize traditional auditing. The framework operates on the principle that compliance patterns exhibit quantum-like superposition states, where multiple potential compliance outcomes coexist until measured against specific regulatory contexts. This conceptual innovation allows for more comprehensive risk assessment and earlier detection of potential compliance violations. This paper makes several distinctive contributions to the field of internal auditing and organizational compliance. First, we introduce a novel mathematical formulation of compliance as a multi-dimensional optimization problem rather than a binary classification task. Second, we develop a hybrid computational framework.