How HY Ltd. Can Fix Its Internal Audit Function Before It Becomes a Bigger Problem

 

When a manufacturing company is growing, the last thing leadership wants to hear is that the function responsible for catching problems is itself the problem. But that's exactly where HY Ltd. found itself. Delays in completing audits, critical risk areas being missed, inconsistent reporting, and stakeholders quietly losing confidence in whether the whole process is adding any real value.

It's more common than most boards like to admit. And the good news is it's fixable, provided you go about it the right way.

Start With What Management Actually Expected

The first and most important step is going back to basics. What did the business actually need from its internal audit function, and how far off is the current reality from that expectation?

This isn't about blame. It's about honestly mapping the gap between what was promised and what got delivered. That review should look at completed audits, timelines, reports, and recommendations, and it should be presented directly to the board and audit committee with full transparency. If remediation steps are needed, those need to be part of the conversation too, not buried in a footnote.

Skipping this step and jumping straight into fixing things is one of the most common mistakes organisations make. You can't improve something you haven't honestly measured first.

Performance Measurement Is Not Optional

Once you have that baseline, performance measurement needs to become a permanent, structured part of how the audit function operates, not something that happens once during a crisis review and then gets forgotten.

For HY Ltd., this means setting clear benchmarks and actually tracking against them. There are six areas that matter most here.

1.      Coverage of key risk areas. Is the audit function spending its time where the real risks are, or is it working through a checklist that made sense three years ago but no longer reflects how the business operates? In a growing manufacturing company, the risk landscape shifts. Audit coverage needs to shift with it.
2.      Timeliness. Delayed audits aren't just an inconvenience. They mean decisions are being made without the information those audits were supposed to provide. HY Ltd. needs to look honestly at where delays are coming from and whether they're a resource problem, a planning problem, or something else entirely.
3.         Quality of findings and accuracy of reports. If stakeholders are questioning the accuracy of audit reports, that's a serious credibility issue. Every finding that turns out to be wrong or poorly evidenced chips away at the trust the function needs to do its job effectively.
4.     Communication of findings. Inconsistent communication was flagged as a specific concern at HY Ltd. and it matters more than people often acknowledge. An excellent audit finding that gets buried in a poorly structured report or communicated without clarity might as well not exist. How findings are shared, with whom, and when, needs to be standardised.
5.       Value of recommendations. Audit recommendations that sit unimplemented or that don't connect to real business decisions are a waste of everyone's time. The question isn't just whether recommendations are technically correct. It's whether they're practical, prioritised, and actually followed up on.
6.     Overall value addition. This is the hardest one to measure but perhaps the most important. Does the board genuinely feel that the internal audit function helps them govern better? Do operational managers feel it adds something beyond compliance box-ticking? If the honest answer is no, that's the real problem to solve.

Linking Audit Strategy to Business Strategy

One thing that often gets overlooked in these conversations is alignment. Internal audit shouldn't be operating on its own track, running through a fixed annual plan while the business evolves around it.

For HY Ltd. specifically, the audit strategy needs to be tied directly to where the company is going, not just where it's been. As a growing manufacturer, new risks emerge regularly, whether in supply chain, operations, financial reporting, or regulatory compliance. The audit function's priorities should reflect that.

When audit is genuinely aligned with the organisation's mission and objectives, stakeholders stop seeing it as a compliance obligation and start seeing it as something that actually helps them do their jobs better. That shift in perception is worth working toward.

The Result of Getting This Right

A well-evaluated and properly structured internal audit function gives HY Ltd.'s board the confidence to make decisions. It gives the audit committee reliable, timely information. And it gives the whole organisation a genuine early warning system for the risks that matter.

None of this happens overnight. But starting with an honest assessment, building structured performance measurement into the process, and aligning audit priorities with business strategy is the right path forward. The problems HY Ltd. is facing are real, but they're also entirely solvable.