As Indian organizations step into 2026, Internal Audit functions are operating in a far more dynamic and scrutinized environment than ever before. Economic volatility, regulatory tightening, rapid digitization, and rising stakeholder expectations are redefining the role of Internal Audit from a retrospective assurance function to a forward-looking strategic risk advisor.
A primary priority will be strengthening governance and aligning with the revised Global Internal Audit Standards issued by the Institute of Internal Auditors. Indian Internal Audit functions must demonstrate conformance not only in form but in substance—through enhanced quality assurance and improvement programs (QAIPs), sharper risk-based planning, and stronger engagement with the Audit Committee. For listed entities, expectations from the Securities and Exchange Board of India (SEBI) continue to expand, particularly in areas such as related party transactions, insider trading controls, whistleblower mechanisms, and risk disclosures. Audit reports in 2026 must move beyond observations to provide root cause analysis, risk quantification, and actionable recommendations.
Cybersecurity and digital risk oversight will remain dominant themes. With accelerated adoption of AI, robotic process automation, and cloud infrastructure across Indian enterprises, auditors must assess IT general controls alongside AI governance frameworks, model validation processes, algorithmic bias, and third-party technology risks. Compliance with the Digital Personal Data Protection (DPDP) Act, 2023 will require robust evaluation of data lifecycle management, consent mechanisms, breach response protocols, and vendor oversight. Scenario-based cyber resilience testing and tabletop simulations will become integral components of audit plans.
The utilization of emerging technologies—particularly Artificial Intelligence—will itself become both an audit focus area and an enabler. Internal Audit functions in India are increasingly deploying AI-driven analytics for continuous auditing, anomaly detection, fraud pattern recognition, and predictive risk assessment. Generative AI tools can enhance audit planning, automate control testing, and accelerate documentation reviews. However, their deployment must be governed by clear policies addressing data privacy, explainability, model risk, and ethical considerations. Internal Audit must also evaluate management’s AI use cases to ensure transparency, accountability, and regulatory compliance.
Fraud risk management will continue to command attention amid heightened enforcement actions by agencies such as the Enforcement Directorate. The shift toward digital payments and platform-based business models increases exposure to cyber-enabled fraud, procurement manipulation, and identity-based risks. Advanced data mining and continuous monitoring will be essential to proactively identify red flags.
Environmental, Social, and Governance (ESG) assurance will further mature in 2026. As Indian corporates face global investor scrutiny, Internal Audit must assess the reliability of sustainability metrics, climate risk governance structures, and supply chain due diligence processes, integrating ESG risks into enterprise-wide risk assessments.
Ultimately, Internal Audit in India in 2026 will be evaluated not merely on compliance coverage but on its ability to leverage technology intelligently, anticipate emerging risks, and strengthen governance in a rapidly evolving business landscape.
About the author:
Amit Sharma is the Vice President and Head of Audit – APAC at EXL, with over 25 years of experience in internal audits, risk management and compliance. As part of his commitment of giving back to the auditing profession, he also serves on the IIA India Delhi Branch Board of Governors and is the Chairperson of the Publications & Research committee of IIA India Delhi Branch.