Did COVID-19 impact your internal audit function? Many organisations face budget cutbacks and staffing reductions while also increasing audit focus on health and safety. In a tough spot? You’re not alone!
A new report by the Institute of Internal Auditors based on surveys of 1,572 respondents from 95 countries across the world that examines the initial impact of COVID-19 on internal audit functions globally has just been released. According to the report, “almost 4 in 10 internal audit functions experienced initial budget decreases due to COVID-19’ and “about 2 in 10 experienced internal audit staffing/outsourcing cutbacks due to COVID-19.”
The report paints a worrying picture of the impacts of COVID-19 on internal audit functions. Auditors worldwide have had to update audit plans, review risk assessments, identify emerging risk, increase focus on health and safety with reduced resources, and in nearly one out of four cases, even perform non-audit work to support their organizations COVID-19 response. What a remarkably resilient group!
Here are the key findings of the report:
- Almost 4 in 10 internal audit functions experienced initial budget decreases due to COVID-19. Budget reductions were most widespread in the regions of Asia Pacific and Latin America and the Caribbean.
- About 2 in 10 experienced internal audit staffing/outsourcing cutbacks due to COVID-19. This indicates there were consistent efforts initially to retain staff despite budget decreases.
- Staffing decreases were almost three times more likely to be described as temporary than permanent.
- Those in consumer-facing industries, such as retail, food, and travel, saw double the occurrence of staffing/outsourcing reductions compared to the average of all industries (43% versus 22%).
- More than a quarter of respondents did not agree that organizations were appropriately involving internal audit in discussions about COVID-19 risk.
- About 6 in 10 said their functions updated audit plans, identified emerging risks, and reviewed risk assessments due to COVID-19. Fewer recommended remediation plans, with the highest average in Africa (41%) and the lowest in Europe (17%).
- About 5 in 10 canceled audit engagements and 4 in 10 added new engagements.
- In response to COVID-19, almost one quarter redirected audit staff to do non-audit work.
- Worldwide, audit focus increased the most for health and safety, but North America and Europe were well below the global average.
The new realities internal auditors are faced with are not trivial. Now more than ever, they need to be efficient, flexible, in touch with the latest trends, and utilizing the best tools. As we move from a reactive state to the initial outbreak to an adaptive state of dealing with the new normal, process and resource optimization have to be at the forefront of auditors’ minds worldwide. Be sure to align your audit team around risks and keep your plans aligned with the resources you have available.
Nimonik offers a wide variety of free resources as well as paid software to streamline and manage audit and other compliance functions. Reach out to us to see how we can help you navigate these challenging times and come out ahead.