As the coronavirus pandemic continues to ravage the economy, companies have had to pivot their strategies and adapt to the challenges that the virus has surfaced. To assess how organizations are handling this crisis from an audit perspective, the Institute of Internal Auditors conducted a survey of the responses by internal auditors to the crisis.
The report surveyed 1,341 internal auditors from 95 different countries, offering a global perspective on the effects of COVID-19 on the internal audit function.
Resources and Viability
Auditors across the globe have varying degrees of confidence in their organizations’ resources and ability to respond to the pandemic, with a sizable minority showing great concern about their ongoing capabilities to survive the crisis. About 20 percent of internal audit respondents do not think their organizations have enough resources to respond to the crisis over the short term.
Different regions have very different confidence levels in their organization’s ability to respond over the short term. Internal auditors in Africa, for example, have much lower confidence in their organizations’ resources, with 36 percent responding that their organizations do not have sufficient resources to deal with the effects of the virus in the short term. European and North American auditors have more confidence. Only 11 percent and 6 percent, respectively, say their organizations do not have sufficient resources to deal with the negative effects of the pandemic. Internal auditors in Latin America and the Middle East have moderate concerns about their organization’s ability to deal with the crisis, with 27 percent and 25 percent, respectively, saying they did not have the sufficient resources.
Organizations are even less confident about their organization’s long-term financial viability in light of COVID-19. Overall, 34 percent of all organizations were very or extremely concerned about their long-term ability to survive the crisis. Internal auditors in Africa, the Middle East, and the Asia Pacific are the most concerned about long-term viability, with 64 percent, 47 percent, and 43 percent, respectively, voicing great concern.
Financial Coping Mechanisms
With COVID-19 upending business operations, the most common financial response has been to find short-term cost reduction strategies, used by 55 percent of the respondents’ organizations. Many organizations also chose to delay initiatives and investments (47 percent), and about 41 percent have reduced operating hours and capacity.
Across the globe, responses were generally similar except for a couple of outliers. Internal auditors in Africa say their organizations have significantly reduced operating hours and capacity, with 59 percent of respondents indicating that their organizations have done so. In North America, 44 percent of respondents say their have closed offices, factories, or locations, compared to the 32 percent overall. In the Middle East, 42 percent of responding internal auditors say their organizations have reduced staff hours and salaries, compared to 23 percent overall.
Strategic Short-Term Responses
About two-thirds (64 percent) of internal auditors across the globe say they have conducted detailed assessments of the short-term impact of the Coronavirus Crisis. A significant percentage (59 percent) also revised business continuity plans to respond to the pandemic. Regions deviated most from each other in terms of communications. More internal auditors in Europe and North America say COVID-19 updates were provided to the board, while more auditors in Europe, the Middle East, and Latin America and the Caribbean say that a special meeting of the board was held to discuss issues. More North American internal auditors say they have conducted more evaluations of third-party relationships, with 59 percent noting an increase compared to the 33 percent overall.
Employee-Focused Responses
Almost all organizations have made adaptations for their employees in light of the crisis. Nearly 90 percent of organizations have remote work arrangements. More than half have restricted travel, and slightly less than half have ceased travel altogether. North America stood out in implementing communication strategies for key employees at 73 percent, compared to an overall level 53 percent of respondents who say they changed communication strategies.
Customer-Focused Responses
Organizations have also focused on developing new communication strategies with customers. A full 82 percent of internal auditors in North America say their companies have revamped communication strategies with customers, compared to 68 percent of all internal auditors who sat their organizations have made changes in this area. Around half of the respondents say their organizations have also developed new health and safety policies for customers and new communication strategies for key stakeholders. A little less than 40 percent have also developed new services related to COVID-19.
Organizations across the globe have all made some adjustments in their responses to COVID-19. With many organization are similarly making tough decisions and prioritizing long-term survival, the greatest variations among the regions lie in confidence about their organization’s capabilities to respond. As the pandemic continues to wreak havoc on companies, internal auditors are indeed worried about long-term viability. Still, they hope that continued adaptation and increased flexibility will help their organizations weather the storm. 
Stephanie Liu is assistant editor of Internal Audit 360°