Implications of COVID-19 on internal auditing

Implications of COVID-19 on internal auditing

Implications of COVID-19 on internal auditing

Amidst the pandemic’s challenging time, the world seems to have paused, and we are in a situation where all we can do is fight and face the difficulties on the health and economic front. It is vital to note that during this period, internal auditing plays a crucial role. The disruptive and unprecedented effects on individuals, society, and government due to COVID 19 has shifted the employee’s workplace back to their homes. The companies in the process have developed a new business model to continue their operations. Consequently, internal auditing also requires a refreshed approach. Here, we have mentioned a few of such implications on the immediate risk areas during Covid 19, and the role of internal auditing.

Impacts of the pandemic on internal auditing

Reprioritizing activities

It’s important to adapt to new situations and challenges in front of us. It requires reassessing the priorities in order to take into account the newly emerged immediate threats. This can include, for example, the senior internal auditor to shift to a more consultive approach or actively taking part in emergency committee meetings and being close to management.

One of the other key roles can be engaging in pro-active activities like advising the business on workarounds and changes in the operations, limiting audit scope to key aspects to assure minimum controls that won’t be compromised despite the crisis.

Re-evaluating audit planning and engagement scope
The planning phase of any type of auditing is probably the most important phase in the auditing process. During the times of Covid 19, it’s imperative to acknowledge all the limitations and restrictions that companies might be facing due to the pandemic. The planned scope will help in reassessing whether or not the audits are still relevant to the business. This might include the addition of certain areas or deletion of some.
The pandemic has brought life to a standstill and restricted movement in almost every part of the world. At such times, owing to travel restrictions, auditors are obliged to work from home. However, such travel restrictions should not affect the quality of work.

Therefore, careful considerations should be made to determine whether or not all the activities included in the phase of fieldwork can be performed on a remote basis such as conducting interviews, verifying the authenticity of documents, or assessing confidential data.

Communication within the auditors and between clients and managers can be a challenge. This can be solved by ensuring meetings and free communication through Skype, Zoom, or any other such medium.
Post audit follow up
The business operations are shaken up due to unprecedented pandemic, and the management is naturally devoting much of its time towards crisis management. This might leave the clients in a fix about how to implement the suggestions and remedies from the audit finding in time. Therefore, the auditors must permit the dispensation to let the client’s management focus on more urgent matters that pose a threat to the business.
One of the most important and key elements of the reporting phase is communication. Clear and consistent communication is expected by audit teams during communications. However, the reporting must have some changes during this time pandemic on the basis of the frequency and the way the auditors report.

For example, they must focus on key risks rather than a distressing report with low-risk findings. Also, while reporting the audit teams must keep in mind that the management of clients has potentially limited capacity to revert back or work on issues reported by them on short notices owing to limited staff and mobilization due to Covid 19.
Some final thoughts
COVID pandemic is a black swan crisis that has successfully pushed businesses from almost every industry into unknown territories. The changing landscapes have left companies uncomfortable in uncovering unforeseen risks. It’s time to develop a flexible and creative outlook in order to manage the crisis. If the internal auditors keep in mind the possible challenges that they might face, it will help them give a plausible explanation and solution to the problems their clients are facing as well. The above-mentioned implications give the internal auditors a bird’s eye view of how during this exceptional time, they need to adopt a refreshed approach of internal auditing and assessing the problems.