Pandemic Accelerated Adoption
Introduction The coronavirus that swept the world beginning in early 2020 turned the standard model of the office — with its cubes and conference rooms — upside-down, as organizations were thrown into crisis management mode and employees, made the bumpy transition to working from home. At one point, as many as 51% of workers were working remotely full time, according to a Gallup survey. 1 The rapid onset of the pandemic accelerated the trend toward remote work in all facets of the organization, including internal audits. While many workers have or will return to their offices in the next few months, a return to the office full time seems unlikely. Indeed, a majority of executives expect at least half their employees to be back working in offices by July, likely as not splitting time between the corporate office and home office.
Remote auditing is not new, so some of its pros and cons are well understood. For example, communication between auditors and clients separated by distance or time zones can create logistical problems. Reliance on technology to gather evidence or facilitate communications offers its own set of challenges, such as poor internet access or limited capacity.
That said, remote auditing could have significant benefits, particularly for organizations with offices widely distributed geographically.
Remote audits eliminate travel time, meaning auditors can spend time on tasks that add value, such as in-depth reviews of documentation or timely completion of audit reports.
Other benefits of a remote audit include:
- An expanded pool of available auditors, including part-time workers and retirees,
- As well as the expanded use of specialists, who can connect for planning or participate short-term in relevant parts of interviews.
- Expanded coverage because of time savings when competing priorities need to be considered.
- Reduced burden on the facility because the assembly of documentation is spread over several weeks
- Meetings can be scheduled more flexibly.
Disadvantages include a lack of available technology and the type of audit evidence that needs to be gathered.
Remote auditing, with its lack of in-person contact, raises another concern: the potential for fraud. This potential is increased during times of disruption. Remote auditing in this area has long been a challenge because of the belief that auditors may be more likely to discover fraud, malfeasance, or simple mistakes when they visit a site and interact with the people there. Sometimes people say all the right words, but their demeanor will show otherwise. The interviewee who avoids eye contact or procrastinates about a meeting or the presentation of documents and the unmistakable vibe of a toxic culture all may be cues more easily observed during a site visit.
How Internal Audit Will Change
Adapting to this accelerated pace of change and meeting extraordinary problems head-on have defined internal audits during the pandemic. In the 2021 Deloitte Global Human Capital Trends survey, executives identified “the ability of their people to adapt, reskill, and assume new roles” as the top-ranked item to navigate future disruptions, with 72% selecting it as the most important or second most important factor.15 (The IIA’s OnRisk 2021 identified talent management as one of the top risks for 2021.)
Skills Internal Auditors Will Need
On-site visits pre-COVID involved time spent questioning personnel, looking at documents, and physically checking evidence — for example testing building security. Practitioners who are now auditing remotely are taking a “more open-minded approach,” Maran said. A deeper examination of data may make it possible to see trends that would not be apparent in an in-person visit. For example, in looking at inventory adjustments, it is possible to review several quarters and look for differences.
Looking ahead, the Chartered Institute of Internal Auditors offers some suggestions for the capabilities auditors will need:
- Emotional intelligence may not have always been top of the list for internal auditors, but it is hardly a new requirement. Internal auditors have to be great communicators. As computers take on ever more of the analysis side of auditing, demand will grow for people who understand how people operate in real life, and what makes them tick.
Business acumen. Internal auditors see the whole of the business from the inside, but they also need to be able to look beyond it, and beyond their sector and region, if they are to appreciate emerging risks and the bigger picture. Increasingly, they are being expected to know a lot about the potential impacts of everything from macroeconomics to climate change and the complexities of supply chains.
- Flexibility and agility. Internal auditors must offer assurance more effectively, more rapidly, and more effectively. This is the holy grail of internal audit and will become even more so in the post-COVID landscape.
- Developing personal relationships/networking. Use personal relationships and find out what peers, colleagues, friends, and family are doing. Be curious and ask questions.
- Being proactive. Imagination and curiosity are now so important that they deserve a mention on their own. Again, they are not new skills for internal auditors, but they have never been more important.
- Selling yourself. If internal auditors want management, auditees, and colleagues to listen to and respond to their messages, they will need adequate sales skills.
Working Toward the New Normal
The fluid environment of the pandemic crisis requires organizations to reset their priorities to watch both the medium- and long-term future, and at some point, the new normal will emerge.
Internal auditors will need technical competence, as well as soft skills necessary to work in this fluid environment, Lesetedi said and will need to be proactive rather than reactive.
Clearly, challenges exist for all parts of the organization in a post-COVID world. Remote auditing surely will test practitioners’ abilities to provide high-level assurance and advisory services. However, it also provides great opportunities to show internal audit’s value to the organization.
İİA, Global Perspectıves and Insıghts (globaliia.org), Remote Auditing: Challenges, Risks, Fraud, Technology, and Staff Morale