A new survey finds that changes internal audit functions made in response to the COVID-19 pandemic are likely to have long-lasting effects and could transform internal audit into the years to come.
AuditBoard, a provider of cloud-based risk management platforms which conducted the survey, says it reveals five trends in internal audit that have emerged as companies reacted to the massive upheaval the pandemic wrought, including increased reliance on technology and innovative ways of conducting audits.
Among the findings of the survey, which polled more than 175 chief audit executives across a range of industries, are:
1 Audit teams will be more focused on innovative means to gather and analyze evidence as part of internal audit processes.
A high percentage of audit teams (83 percent) said the creative solutions they deployed in the process of working around lockdown limitations produced new efficiencies — as well as new methods — for evidence gathering. Among the innovative uses of technology that have proven effective in the past year have been the use of drones, reliance on pre-positioned security camera video feeds, and video documentation by smart phones and other devices. Chief audit executives (CAEs) have reported that the use of drones to document the physical existence of assets or control effectiveness has provided sufficient evidence more efficiently than even traditional means.
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2 The use of technology will be more critical to conducting internal audits in the future.
For a profession that has traditionally relied on face-to-face meetings and access to physical evidence, mandatory lockdowns necessitated the greater use of technology to continue working. In particular, cloud-based platforms that were designed to not only facilitate remote collaboration, but also automate workflows across the three lines of defense, were successful in streamlining and facilitating the actions of multiple stakeholders to reach common, intersecting goals. Going forward, CAEs believe the use of technology will continue to play an important role in internal audit processes, with 91 percent of CAEs agreeing with this statement.
3 Most face-to-face meetings will be replaced with virtual meetings using video streaming technology.
By all accounts, audit, risk, and compliance professionals have embraced video platforms not only for meetings between members of the internal audit staff, but also for meetings and other face-to-face interaction throughout the audit process and communications with key stakeholders. Nearly three-fourths (72 percent) of CAEs believe their teams will likely continue to rely heavily on technology-facilitated meetings as a more efficient means of communication.
4 Internal audit teams will focus more on emerging risks and their possible impacts on the company.
The pandemic has proven beyond doubt that the dynamic nature and velocity of risks must be an overarching consideration for internal auditors and other risk professionals. A full 72 percent of CAEs said they will put a greater focus on emerging risks and their possible impacts, speaking to the importance of auditing at the speed of risk. Now, there must be a continuous component to assessing risks, not only in performing risk assessments with greater frequency, but in the methodologies and technologies used to create a continuously monitoring risk function.
5Internal audit teams are unlikely to return to a traditional workplace model and expect to work remotely all or part of the time.
The COVID experience has demonstrated loud and clear that the internal audit workplace of the future does not need to be exclusively in a traditional office setting. More than two-thirds (68 percent) of CAEs said they will embrace flexible workplace arrangements in the future. This may prove particularly true in markets where internal audit talent (especially expertise in specialized risks) is in short supply.
“In many ways the COVID-19 pandemic has been the most disruptive event in the history of the internal audit profession. Without question, the events of the past 18 months have triggered fundamental changes in how audit, risk, and compliance professionals undertake their responsibilities—from how we communicate with our teams and other stakeholders to our day-to-day processes,” said Richard Chambers, senior internal audit advisor at AuditBoard. “It’s clear the internal audit profession is evolving to be more flexible, innovative, and productive, leveraging technology to stay resilient in an environment where risk priorities can shift overnight.”
While the disruption caused by the pandemic has been difficult for most companies and professions, internal audit in particular, most observers have applauded the profession’s response and creative solutions to problems, particularly around remote auditing. Many of those solutions, as the survey confirms, are here to stay. 