As the pandemic has swept across the globe, it has upended organizations in every sector of the economy. Some have thrived, some have fallen by the wayside — and many have moved forward by changing the way they do business. As a result, internal auditors are finding their historical audit universe feels outdated.
Audit plans need to be refreshed to address emerging risks. Even the way teams audit must evolve. And while all this change may feel daunting, it is also an opportunity to rethink internal audit's value, how it's perceived today, and what it needs to look like tomorrow. Now is the time to reposition the audit function to maximize value delivery in this rapidly changing world.
Stakeholders and Internal Controls
Executives and boards need to challenge everything about their business to emerge from the current situation with strong and competitive fundamentals. For example, marketing strategies are transforming, and go-to-market approaches need to be revised in light of the shift to a virtual-centric environment. Profitability models and cost structures are being reevaluated along with organizational makeup and spans of control. Old risks are being reprioritized and new risks are emerging. Leadership wants key departments such as internal audit to be proactive and engaged in the change.
"As the business environment is changing so rapidly, our stakeholders have expectations that we (internal auditors) will be changing at least as fast in order to help the business to mitigate and understand emerging risks," says Rachel Tressy, chief audit executive at Voya Financial in Weatogue, Conn. "For example, we've moved away from an annual audit plan, in favor of a six-month view of our plan that we share with our audit committee quarterly. This ensures that both our plan and the specific scope of our audits are focused on the highest priorities."
The cornerstone of audit testing — controls — also must change to keep up. Take, for example, cybersecurity controls. New demands for greater remote workforce capabilities challenge existing data security and privacy controls. Changing customer behavioral patterns and expectations are necessitating new controls related to companies' online presence and virtual transaction capabilities. This flood of new control requirements is being countered by companies' need to cut costs, including reducing headcount, to maintain profitability. In addition, cybersecurity risk, historically a hot topic garnering much attention, may now be eclipsed by all of the new emerging business risks. Internal audit needs to refresh its view of the control universe and help identify new gaps that need to be addressed.
Auditors also need to ensure a strong focus on relationship building and communication — two skills that can make the difference between a good audit team and great one. And in the virtual world, it takes even more effort to get these skills right.
"We have to find creative ways to stay connected to business partners, and our team members in the virtual environment — we don't have the ability to 'pop in' and talk," Tressy says. "We need to find ways to build and expand our relationships; we need to be 'in the know' and on people's minds. When we have strong relationships and know what the business is going through, we are better auditors."
Innovation and Development
Changing the nature and focus of audits is only half of the repositioning needed right now. This is also an opportune moment for audit teams to rethink how they perform many aspects of their work. Embracing new processes and tools to modernize and maximize the audit function helps not only with the perception of internal audit's value, but also the reality of its contributions. Opportunities to evaluate include virtual auditing, electronic workflow management, and distance team-building and development.
"I am reminding team members to intentionally create space in their week to innovate," says Tammy Valvo, chief audit executive for Gate City Bank in Fargo, North Dakota. "We are identifying what we want to look like in the future and then creating the roadmap to get there, including KPIs and KRIs linked to performance objectives. We will also spend time discussing the concepts of independence and objectivity to ensure we maintain them in our future vision."
COVID-19 has put a strain on auditor development due to reduced in-person interaction, communication constraints, and decreased availability of traditional training outlets. But this period of isolation has also provided a time for reflection that can be channeled into a reevaluation of team development needs and gaps. Professional development must continue to be a top priority, enabling audit teams to maintain relevance by developing the skills needed to address their audit plan and deliver value. Fortunately, there are a myriad of tools available to facilitate training for a remote workforce.
Zoom, Microsoft Teams, Skype, GoToMeeting, and Webex are some of the more common platforms to deliver real-time feedback and synchronous online teaching. Also, many companies maintain their own library of recorded training that can be accessed online, or leverage online learning content consolidators such as Coursera and edX. Specialized training that once was only available in person can now be easily recorded and accessed via online technology such as Camtasia, Biteable, or Soapbox. With so many powerful tools available, this can be a productive time for audit leaders who want to develop their team — and for auditors who want to brush up on their skills.
Maximize the Opportunity
Change is accelerating, and "business as usual" will not return in the same form as before. Now is the professional call to action for audit teams to not only embrace that wave of change but also to harness it, using this moment of reflection to determine what internal audit can be in the future. Audit leaders who maximize the opportunity to refresh and reposition stand to make their work more relevant and impactful for stakeholders as well as more exciting and rewarding to their teams.
Karen Begelfer will be moderating a panel discussion on "Repositioning Yourself and Your Team for 2021" at The IIA's Women in Internal Audit Leadership Virtual Forum on Sept. 16.