Friday, December 25, 2020

6 Tips for Conducting Virtual Internal Audits


6 Tips for Conducting Virtual Internal Audits

Bryan Kesler, CEO at CPA Exam Guideis a passionate CPA exam mentor with a mission of helping all CPA Candidates struggling to pass the CPA exam find success.

COVID-19 has impacted almost every aspect of today's work environment, including on-site internal audits. More and more organizations and CPAs are trying to adjust to virtual internal auditing to drive change and increase long-term resiliency.

We focus on the best practices for performing internal audit services in a remote environment. But let us first start with why virtual audits are so important for organizations today.

The Need for a Remote Audit

Organizations are subject to internal audits for a variety of reasons, including:

  • Assessing regulations, compliance with standards, and adherence to requirements/specifications

  • Evaluating process and system performance

  • Confirming conformance with contractual obligations

  • Evaluating the effectiveness and adequacy of the quality management system

However, with strict travel restrictions brought by COVID-19, traditional on-site audits are no longer a feasible option for many. Virtual or remote audits offer an organization with a viable alternative to ensure continued compliance with regulatory requirements.

Virtual audits are performed virtually rather than on-site with a client. Although it is not a completely new concept, auditors are required to quickly adapt their audit procedures to fulfill their obligations while working in a virtual setup.

To successfully navigate their internal audit requirements, companies today should consider deploying various digital technologies to become smarter, more cost-efficient, and more agile about offering services that make an impact.

6 Top Tips for Conducting Virtual Internal Audits

Here are some top tips for conducting virtual internal audits:

1. Revisit the Risk Assessment Methodology and Plan the Audit Schedule

First and foremost, audit teams may need to reprioritize and reassess their internal audit processes and plans. With the pandemic turning everything upside down, it's time to revisit your risk assessment methodology to keep pace with the changing landscape.

This includes collaborating with key stakeholders to identify changing or new risks and determining how to effectively work with the business in planning mitigation strategies.

Further, work on the complete audit schedule and logistics. The basic requirements for an internal audit program in any organization are still prioritized based on the seriousness of the process, risk, and internal or external performance trends. 

The benefit of an internal audit is that you can shift your focus on the highest risk processes. This way, all the audit objectives can be met and managed in a streamlined way.

2. Create a Clear Audit Plan

Virtual audits bring several deterrents to the table, including bogged down Wi-Fi and internet connections, slow-functioning systems due to teleconferencing apps, and more.

Therefore, audit teams must set clear expectations of the evidence they wish to see with an audit plan. Plus, decide on suitable expectations for start times, the total duration of the live audit time, and the closing meeting time.

3. Invest in Collaborative Tools

Team efforts and relationship management play a key role in successfully navigating the process of remote internal audits. However, it is quite challenging to collaborate and connect with various stakeholders, including colleagues and process owners, when working virtually.

Invest in technology-driven collaborative tools like videoconferencing with options such as recorded meetings, screen-sharing, and more. Thus, you can remove distance barriers and review procedures or documents together in real-time.

Leveraging these tools also allow auditors and CPAs to pick up on visual cues typically observed during live interviews. This kind of real interaction plays a significant role in building rapport before with auditees, which is a crucial part of the internal auditing process.

4. Establish Standards for Secure Access to Key Sources of Business Data

Like traditional onsite audits, virtual audits require detailed and careful planning on the part of both the auditor and the organization. 

The organization needs to collect all the documents related to online tax filing and similar compliance records before the internal financial audit. Companies must then identify the best way to present that information remotely. A few options entail an email transfer ahead of time, sharing the screen during a web meeting, and allowing secure access to company Intranet/shared directory space.

Some other things to take care of include:

  • Identify specific focus areas for the audit well ahead of time using a site map as a guide. This is to ensure that all the required areas are covered for conducting a smooth suit.

  • It is best to schedule interviews in advance to ensure availability. However, there should also be an option to conduct interviews on an ad hoc basis as the need arises.

5. Identify Opportunities for Continuous Monitoring Capabilities

With most internal audit teams working virtually, the value of analytics-driven process analysis and exception-based monitoring is becoming more and more evident. 

Internal audit departments possessing such robust capabilities can demonstrate more flexibility and greater resiliency in such haphazard global situations. Resultantly, it is important to target analytics and automation toward audit areas that require standardized and repeatable tests.

Apart from identifying these opportunities, make sure to reflect on the existing use of digital tools and identify any need for testing workarounds in the foreseeable future.

6. Redefine the Communication and Reporting Model

As internal audit services and processes move online, it becomes imperative to redefine the audit team's reporting and communication strategies. What this implies is modifying the means and frequency of communicating with stakeholders.

There is an enhanced need to compile a list of all stakeholders who need to stay informed, alongside increasing the frequency of communication.

In Conclusion

Organizations across the globe are attempting to establish what the new normal looks like in terms of employee health and safety, business continuity, operating practices, and compliance.

For many organizations, such measures are implemented on a temporary basis. However, if you're working in accounting, you must face the reality that these new processes are likely here to stay.

Internal audits are one aspect of the overall system that can be seamlessly transitioned to the virtual space. As long as the right strategies and robust technology are in place to ensure ongoing compliance, companies can come out stronger on the other side. 

Therefore, it is important to set-up the virtual audit process as thoroughly as possible with long-term success in mind. 

Author Bio:

Bryan Kesler

Bryan Kesler, CPA is a passionate CPA exam mentor with a mission of helping all CPA Candidates struggling to pass the CPA exam find success. As a business owner and licensed CPA, his priority was to find a firm that could manage his accounting and provide him with CFO services. He understood that if he was to stay focused on his singular goal of helping as many CPA candidates pass the CPA exam, he shouldn’t be the one to handle his accounting or tax services.