Remote auditing, also known as online auditing or virtual auditing, has been in use by organizations worldwide for many years. Engagements conducted remotely use technology to carry out audit work without requiring the practitioner to be physically present at the audit location. The approach can yield significant benefits, particularly for organizations with geographically dispersed operations.
Among the most significant benefits are cost-reduction opportunities related to travel. An auditor from Pakistan at a multinational company, for example, worked remotely on a four-week assignment in South Africa, resulting in savings of approximately US$7,000 in air travel and other expenses. Beyond cost savings, however, remote techniques can enable practitioners to more easily review locations that are difficult to access because of travel restrictions, safety concerns, or lengthy visa processes. They can also contribute to more efficient resource utilization in scenarios where information can be requested instantly via phone call or email, without the need for an auditor on site.
Given that business disruption requires internal audit functions to manage costs more efficiently and effectively, this is an opportune time for internal auditors to take a closer look at remote auditing. Auditors can follow several steps to help optimize its use on engagements and ensure positive results. But first, they should familiarize themselves with potential hurdles that could impede successful practice.
Knowing the Limitations
Like most other technology-dependent approaches, remote auditing has its share of implementation challenges. Areas that merit particular attention include communication, practical knowledge, client impact, and technology.
Communication Auditor–client rapport established through face-to-face interaction represents a key facet of traditional auditing. And while effective working relationships can be fostered to a degree through technologies such as telephone and videoconferencing, they are not as easy to initiate as when both parties are in the same location — where a simple knock on the door or impromptu meeting in the hallway can elicit a conversation.
Familiarity With Remote Auditing Clients and audit staff may not be familiar with the mechanics of a remote audit, leading to some confusion. Traditional audits involve regular face-to-face interaction in settings where there are often no time zone, language, or cultural differences. Remote audits, depending on scope, may lack these elements, potentially resulting in miscommunication or unreasonable expectations.
Client Burden Remote audits can increase the client's workload. In a traditional audit, for example, verifying the physical existence of an asset would involve visiting the asset location. Performing this same procedure via a remote audit would require a client representative to visit the asset and email a photograph to the auditors.
Technological Limitations Isolated locations or operations based in a different country may not have the infrastructure in place to fully support a remote audit. Issues can vary, ranging from basic challenges such as insufficient network bandwidth to more complex issues such the size and format of data and local regulations affecting data transfer.
Strategies for Success
Depending on an organization's size and scope of operations, effective remote auditing with significant cost savings can be achieved by following several key guidelines.
Know When to Audit Remotely Remote audits are not suitable for all clients and all engagement types. Practitioners must determine whether the proposed audit has an appropriate scope of work and a client willing to participate in the process. Client participation, in fact, is crucial, as reluctance can result in communication delays, lack of understanding, and miscommunication.
Technology also plays a pivotal part determining remote auditing feasibility. It is easier, for example, to extract and transfer data from systems such as SAP compared to data held in physical documents.
Communicate Up Front All stakeholders should understand what a remote audit is, its mechanics, and any expectations associated with the process. To address these issues, internal audit may want to establish an agreement with the client that specifies how communication between the two parties will occur, and at what frequency. This agreement can help reduce the potential for misunderstanding and enable all stakeholders to understand the resource and time commitment required.
If the audit team is split between on-site and remote auditors, the remote practitioner needs to provide periodic updates on audit progress to the on-site team, and vice versa. This process removes duplication, allows for brainstorming, and ensures that the remote auditor still feels connected to the team.
Select the Right Tasks Remote auditing can be more useful for quantitative tasks than qualitative tasks. For example, carrying out a review of an organization's invoice processing — when the data and support material are readily available online — requires less interaction with the client compared to reviewing the adequacy of its compliance with international trade requirements. The degree of communication involved is the main differentiator. Data analytics, as well, would require less interaction in comparison to a review of the procurement process for new vendors.
Do Your Homework Given remote auditing's divergence from traditional auditing, client and practitioner preparation is key to carrying out engagements successfully. Both parties should, for example, become familiar with the necessary communication methodologies (teleconferencing, desktop sharing, etc.) in advance. Moreover, internal audit should dedicate a certain amount of time for the duration of the audit to the remote auditor and respond timely to any requests. Appointing an on-site liaison or coordinator to assist the remote auditor on a short-term basis can also be beneficial.
We live in a global and increasingly digital world — remote auditing is ideally suited to helping provide assurance in it. With the right strategy, remote auditing has the potential to be an efficient alternative or supplement to traditional audit approaches. It provides global and local organizations with the agility to respond to disruption and other challenges in today's dynamic business environment.