The world has changed… Has Internal Audit?

The world in which we live and work has undergone a swift and dramatic shift in a very short period of time. The environment made up of substantial corporate office complexes, executive strategic closed-door meetings, and gathering around the water cooler has seen its better days. The impact of COVID-19 has resulted in organizations doing a full 360 in executing their work objectives and strategic plans. 

So where does that leave internal audit? Most experts agree the world has changed permanently and most likely companies will figure out some new hybrid method of working and executing their goals once we hit a steady new normal. In the early days of the pandemic, internal audits saw themselves quickly revising audit plans and revamping work.  Some assisted process owners while others focused on high-risk issues faced due to the pandemic and how the company was responding.

As we move forward with a vaccine, some are returning to a semi-normal workplace while others have re-evaluated their protocols and are developing new and better ways to continue to gain efficiencies from work environments as well as savings in overhead costs. 

Internal auditors’ normal processes of entrance and exit meetings, documentation review, interviews with process owners, completion of data analytics and even working through identified issues will definitely be impacted in the long term. As a profession, we must be thinking forward to synergize efforts and ensure the quality of our work remains at a high standard. 

Let’s consider some of the challenges we face. 

Entrance meetings -  We often take these for granted.  We previously had a group of people around a table in the conference room who could freely speak and observe each other‘s body language.  That has changed. Now there are zoom and skype meetings where the number of attendees may be limited in order to be effective.  The ability to ask questions and read body language is somewhat limited due to the aspects of the technology. 

Interviews - In the past we’ve had the luxury of meeting in a neutral area where we could easily sit across the table with a process owner and ask questions in a relaxed atmosphere with time to follow up and get additional feedback.  Now some find themselves limited due to zoom call time constraints and the lack of free flow of information because of the inherent atmosphere of asking questions over an internet call rather than being in the same room with someone.

These are just minor examples. But the question is “How should internal audits think forward and adapt their processes to ensure efficiency effectiveness and value”?

Let’s start at the beginning

The IIA Standards

I have observed that many process owners who are not involved in the internal audit profession are not aware that the IIA Standards even exist. As opposed to doctors and lawyers and certain other professions that we expect should have standard protocols, many individuals don’t realize that our profession indeed has developed a series of guidelines and best practices for actually executing our work. Now more than ever it will be important for internal audits to ensure not only executive management and the Board of Directors understand aspects of the IIA Standards but also process owners who we deal with in our individual audits. Understanding that we have guidelines and protocols also may assist process owners in being more open and transparent with their thoughts and information which will be critical in the new world of long-distance work.

Relationship building

This typically starts with getting to know people on an individual level. It can be facilitated by short introductions within the corporate walls followed by casual meetings in social areas in the office or cafeteria. Later it moves to more one-on-one relationships through coffee lunches and other outings. 

This concept will certainly undergo a process change.  The ability to meet one-on-one may become limited for a period of time.  I happen to live in the Midwest in an area that borders state lines. Our downtown area is an approximately 30-minute commute from the south side of the city. Other people may live on the north side of the city and also have a 30-minute commute downtown. However, that equates to us living almost an hour apart from each other. If a return to work process does not get back to a consistent work schedule in the office it may be difficult to have those one-off meetings with individuals where you can get to know individuals, their personalities, their influence in the organization, and their background allowing us to create a foundation for relationship building.

Think of your own personal circumstance or possibly the inability to get together with loved ones on a regular basis due to social distancing requirements. This has created a void and separation for relationship building. This is going to be a phenomenon that we will experience in the workplace as organizations evolve their work structure.

Audit Plan

Consider the procedures your organization uses in developing its annual audit plan.  It may consist of one-on-one interviews, business risk assessments, questionnaires, or a combination of many of these concepts.  In a world where our professionals are working in distant locations, it may be difficult to execute transparent cross-functional business risk assessments with a zoom or virtual environment.  So now what?  Do we go back to the old way of trying to do individual interviews that are siloed in their execution?  Maybe we send out a host of questionnaires hoping process owners answer them and rely on the ability of auditors to interpret these documents.

In today’s virtual environment, tools and procedures exist to effectively create an assessment process that will allow process owners to be able to collaborate in a real-time open environment.  Internal audits must seek out these solutions and ensure their audit plan processes do not return to the days of old when we asked the simple question “What keeps you up at night”.

These are just a few of the many challenges Internal Audit will face in the new normal. I look forward to your thoughts.