The COVID-19 pandemic has become an unpredictable event that has pushed people, businesses, governments, and society as a whole to the brink. With lockdown measures in effect, companies have had no choice but to let employees work from home, and they also have adopted innovative operating models to continue and sustain their businesses.
These extraordinary times require a reinvigorated approach from Internal Audit (IA) drawing on the particular set of abilities, proficiencies, and knowledge that IA brings to the table. Companies are going through a significant difficult period, and existing internal audit plans are unlikely to be of any use now.
The New Standard In Internal Audit
In order to adapt to the new normal, Internal Audits have to fully evaluate the operational challenges faced by the company and consider the new operational work environments to adjust the overall audit plans accordingly. Subsequently, Internal Audits can inform and guide companies about their immediate priorities over the upcoming months.
Companies must comprehend and alleviate the crisis they are currently facing – commitments, activities, goals, and ethics. Changing priorities at companies should also translate to changed priorities for Internal Audit as it should continue to be active and play an essential role in helping companies understand the severe impact COVID-19 has on their control environment. Internal Audit can help assist companies in constructing and shaping their control ecosystem for work from home or remote location practices as well. Additionally, the Internal Audit also provides data-backed insights and assurances to companies about the effectiveness of their control operations.
Internal Audit should also perform the following key actions in this scenario of COVID-19 crisis:
Understand and examine the full range of immediate risks faced by the company
Analyze business continuity and crisis management plans, including IT arrangements
Advice on risks that may occur in the future and set up controls for the same
Adapt to the remote working conditions, while still delivering effective services
Continue to carefully observe and update the company’s internal audit plans
The Role of Internal Audit Amidst COVID-19
How should the Internal Audit alter its approach towards audit planning and risk coverage?
Internal Audit should adopt an agile audit planning approach which is based on iterative and flexible planning that involves working in short lengths for greater efficiency. Adopting this approach saves time, reduces costs, and leads to increased flexibility and communication. Internal Audits should embrace short-term prioritization and handle periodical updates to the audit plan to reflect the changing pace of the risks involved.
How does Internal Audit amend its coverage to ensure that it takes a well-adjusted and realistic consideration of risk?
The primary aim of Internal Audit should be to provide insights and assurance to increase focus on aspects of any critical matter. As a result of the pandemic, the ever-changing risk landscape has become more volatile, and Internal Audit must cordially work together with the key stakeholders to analyze the risks and mitigate them.
How does the Internal Audit continue to provide its ongoing assurance activities without adversely affecting critical operations during a crisis?
Internal Audit functions should take the following into account:
Recognize all the key stakeholders and discuss their availability during the planned fieldwork periods. Wherever it’s possible, Internal Audit should schedule a time for individuals to carry out remote walkthroughs, give progress updates, and deliberate the emerging conclusions.
Embrace the use of new technologies to deliver work, such as Google Meet, Zoom, and Microsoft Teams, which can also improve work efficiency.
Deploy analytics to deliver Inter Audit work remotely, emphasize outliners, improve coverage, and reduce business interruptions while providing assurances and critical insights.
Should Internal Auditors collaborate with other assurance providers to diminish disruption to the business?
In the current state, companies have reduced organizational and management bandwidth. Thus, Internal Audit should consider opportunities to decrease overlap with other assurance providers like Enterprise Risk Management, Compliance, and External Audit. Internal Auditors should communicate with the aforementioned assurance providers to comprehend their scope of work, coverage, and depth of testing to collaborate with them.
Can Internal Audit give real-time assurance to teams who need to take quick decisions, and how can the IA help companies move ahead?
IA functions should consider the following:
Attend executive decision-making meetings and provide an objective opinion to try and change the management’s stance on risk
Appraise the design of altered or new controls before implementation due to the changing work environment
Deploy agile reporting mechanisms to provide insights quicker
When should Internal Auditors communicate with stakeholders, including Audit Committees and regulators to discuss adding higher value to the IA plan?
It is beneficial for Internal Auditors to interact with the audit committees and regulators as it helps them understand their viewpoints and important priorities. Besides, early discussions help Internal Auditors to know whether any elevated risks have to be assimilated into the audit plan and if there are any pending critical tasks left to be completed.
What impact does the postponement of superfluous Internal Auditor’s tasks have on the IA function meeting and its statutory requirements?
The Audit Committee guides this entire process, even including the responsibilities of the directors in providing the necessary oversight. It is vital to have clarity on what has and has not been considered and to espouse a limitation of scope approach where required. The undermentioned should be presented clearly when reporting:
Scope, restrictions, and context
Central themes and lessons emphasized
Root causes of any disruption or operational challenges
Why Consider Outsourcing For Your Upcoming Audit?
Companies that do not want to spend internally for acquiring audit expertise may decide to access substantially higher skills externally. Outsourcing offers the flexibility to decrease or increase their internal audit actions to meet all current and forthcoming demands of the business.
Through outsourcing, the crucial elements of an internal audit and assurance functions will not only minimize costs but also free up resources and essential staff. Thus, allowing enhanced focus on core competencies while utilizing relevant skill sets, best practices, domain knowledge and corporate auditing to improve the overall efficacy of the company.
How TRC Helps with Internal Audit Function?
The current times are challenging, but an IA’s potential influence is enormous: assisting in providing a trusted risk perspective when critical risks are increasing and changing quickly. Internal Audit if carried out properly, can provide the foundation for a company to achieve its aspirations and goals.
At TRC Corporate Consulting, our expert internal audit and assurance professionals help your business take a step forward by changing challenges into opportunities. Get in touch with our team at TRC Corporate Consulting for any additional information relating to our Internal Audit services.
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