Remote Audits Bring Plenty of Advantages Along with the Obstacles

GUEST BLOG
As the world became chaotic around us earlier this year, internal auditors were pushed to work remotely, upending a lot of the conventional wisdom about what an internal auditor’s job should entail. Similarly, external auditors found themselves in a completely new world. With clients closing their offices, audit fieldwork is being successfully completed from the homes of auditors, and the traditional model of living out of a suitcase and working at client sites may fade, even after the current pandemic has passed.

Perhaps one of the few positive developments of the coronavirus crisis is that audit departments are identifying new ways to work and doing so more quickly than they might have under normal circumstances. They are traveling less, working from home more, and focusing on critical risks to the business. This could have a positive effect on the high rate of turnover in internal audit and may help many auditors attain a better work-life balance.

But I’m an “old school” auditor. I believe that regardless of technology, necessity, and changing attitudes, there will always be a need for auditors and auditees to interact face to face. It is important to ask some key questions to determine if remote auditing is ideal in each situation. What are some proven strategies to work remotely? When is remote work appropriate? And when is an in-person meeting the best option, despite all the obstacles in our way?

We recently interviewed chief audit executives across the country to learn firsthand how they were adapting and to better understand how the industry as a whole is adjusting. What we found is that while remote auditing has its drawbacks it can be effective and even has some benefits over the traditional process of conducting audits on site.

Remote Auditing Works!
When the pandemic first became serious and working from home the norm, the big question on many auditors’ minds was which projects on their annual audit plan could most easily be completed from afar. Some projects that that fit the bill were legal function reviews, records retention audits, website compliance reviews, corporate culture audits, validating complex accounting models, and others.

Auditors also used this time to complete critical tasks that are often neglected, such as creating or updating audit policies, procedures, charters, and job descriptions. Some auditors took this time to prepare quality assurance self-assessments, quality assurance and improvement programs, or create long-range strategic plans for the internal audit function.

As social distancing turned into a full-blown quarantine for most of us, we have been forced to think outside the box. The tasks that were low-hanging fruit for distance working have been mostly completed, and auditors became concerned that their reduced presence could result in harm to their companies. Working from the confines of their home offices, internal auditors began to worry about higher risks of theft, fraud, misappropriation, and malpractice. While internal audit is not the control, we would be remiss if we didn’t ask the right questions and adapt our plans to the risks in our environment.

Luckily, there is anecdotal information that creativity and innovation have won the day. Many auditors have found that remote working is not only possible, but that it can add value and efficiency. Working remotely has forced internal auditors to be more proactive and to think outside the box.

Examples of Remote Auditing
Auditors whose companies have invested in laptops, electronic workpapers, cloud-based audit management systems, and document imaging were at a clear advantage when working remotely became the norm. The more information auditors have at their fingertips, the more remote auditing is possible.

One of the most impressive examples of remote auditing I’ve heard since the pandemic started is remote audits of bank and credit union branches. Using FaceTime and security cameras, auditors were able to observe a branch’s controls, operations, and even count cash! I was skeptical when I first heard about this, but upon reflection realized the surprise element of the branch audit is alive and well. It would be nearly impossible for a branch employee to perform a fraudulent cash count on camera. This approach, which is likely to become more common even after coronavirus, allows auditors to spend less time on the road traveling from branch to branch, reducing costs in addition to limiting contact.

Asking auditees to perform a full self-assessment prior to any audit work is another example of a practice that grew out of the necessity of remote auditing, but that has worked well and is likely to continue into the future. While some auditors may be inclined to dismiss this approach out of concerns that audit clients will not be objective. When you delve further, though, the benefits become more apparent. Why not ask auditees to assess their own work? It can help an auditor prioritize work by considering what problem areas deserve closer and in-person attention and which tests can be performed safely from a distance.

The most common audit task that went virtual is meetings. In fact, many of my friends and colleagues across industries have expressed amazement and frustration at the number of meetings they are now attending despite being on lockdown. Technology solutions such as Zoom and WebEx have made this possible, but the simple conference call shouldn’t be dismissed. These are all great options to limit in-person committee meetings or even board meetings, which have always presented a logistics challenge.

The Limits of Remote Auditing
I would be a hypocrite if I only discussed the cost savings and efficiencies of remote auditing. There are plenty of drawbacks too, some obvious and some less apparent.

At the top of the list may be the difficulty of building relationships from afar and through the limitations of digital platforms. Sometimes, auditors are treated as outsiders and that can only be overcome by building real relationships throughout the organization. Recently on a virtual presentation call, I preached to a group of auditors about attending as many company events and functions as possible. Auditors should always attend company parties, volunteer at sponsored charity events, and run or walk with your fellow workers in company-sponsored races. If you make your presence known, it is a lot harder for anyone to deny internal audit a seat at the table. This lesson applies to in-person auditing as well. Sometimes you have to get in their face to be acknowledged!

Another clear benefit of being in the room with your auditees is your heightened senses. Sometimes people say all the right words, but their body language and demeanor can give away that not everything is as it seems. Interview subjects who have something to hide often avoid eye contact, constantly fidget, adjust their seat and clothing, and otherwise show you that they are uncomfortable. While these things are not impossible to catch via phone or video, they are spotted more easily in person.

Another positive aspect of internal auditing that is hard to replicate while working at home is that, in a strange way, it can bring different parts of your company together. I have worked in financial institutions for most of my adult life and held positions on the frontline and back office sides. I can tell you from my own experience and that of many of my peers that the divide between corporate headquarters and branches, retail outlets, and satellite offices is real. If auditors stop going to branches altogether, it is just another way that the frontline team could observe they are treated differently from everyone else. Hopefully your company makes many efforts to help geographically remote workers feel included.

Do your part as internal audit by making all aspects of the company one team… Audited equally!

It’s About Balance
While remote auditing can and should be explored, our industry will never be 100 percent virtual. The benefits of having personal contact and connections with auditees is simply too important. Once the pandemic is behind us for good, consider going on a corporate “tour” and spending some of your time with the different teams and locations at your company. Reintroduce yourself to employees you haven’t seen in a while and work somewhere else for a day or two. I guarantee you’ll learn something new and interesting about your company and the people who keep your lights on!

Have you implemented remote auditing at your company? How did it go? What lessons did you learn? What will you keep when work restrictions are lifted? Leave a comment and tell us about it! 

Olivia Whipple is co-founder of The Audit Library, a digital collection of internal audit documents, templates, and tools. She is also an internal audit consultant specializing in the Credit Union industry and a former Chief Audit Executive.