Abstract
Background
The internal audit function is a strategic infrastructural function of a company, organisation, or institution. Its digital transformation process must align with the organisation-wide digital business transformation process. The main determinants distinguishing successful from unsuccessful companies and internal audit functions are their overall business models.
Objectives
The main aim of this paper is to propose and design a unique digital business model canvas for the internal audit function and test its usefulness in practice. It also aims to investigate the current state and characteristics of internal audit functions’ business models and their innovations in the financial sector.
Methods/Approach
A combination of a comprehensive literature review and qualitative empirical research is applied to achieve the defined objectives.
Results
A unique canvas for designing the internal audit function’s business model is proposed. It summarises, on one page, how the function creates, delivers, and captures value for its stakeholders. This theoretically developed and empirically validated model is suitable for developing, describing, analysing, and synthesising customer segments, value propositions, channels, customer relationships, strategic direction, key resources, key activities, key partnerships, and operational direction.
Conclusions
Empirical investigation of the current state and characteristics of internal audit functions’ business model innovations and their compliance with global digital transformation trends shows that, in the Croatian financial sector, internal audit functions digitally innovate some elements but do not yet holistically transform all aspects. Thus, their digital business models differ in digital maturity, though digital transformation processes within the internal audit function align with those at the institutional level.