Financial and Risk Advisory Services: The Impact of COVID-19 on Internal Audit

The COVID-19 pandemic has been an unprecedented challenge for internal auditors within financial service institutions. Read this post to know more about the impact of the pandemic

Thinking ahead is crucial for internal auditors to remain relevant. But even the best of audit departments in the biggest financial service institutions globally were not prepared for the prolonged slowdown caused by the COVID-19 pandemic. The disease resulted in severe economic disruption, forcing auditors to adjust and reprioritize the audit plans.

According to a survey of more than 1,500 auditors worldwide by the IIA, more than 50% of the functions reviewed their risk assessment policies, updated audit plans, and worked towards identifying emerging risks to respond to the changing dynamics. Here’s how the pandemic impacted the internal audit departments within the BFSI sector-

The Changing Audit Environment

The slowdown and the changing work environment throughout the pandemic resulted in deferment, delay, and cancellation of several internal audit plans. Many of the BFSI organizations significantly restructured their 2020 audit plans more than they’ve ever done in the recent past, creating a backlog of key audits in several cases.

Moreover, the pandemic also resulted in a host of new risks regarding workplace safety and remote working. COVID-19 also added new dimensions to the prevailing risk areas such as customer experience, cyber security, and supply chain sustainability.

As the risk landscape is only expected to evolve further in the post-pandemic world, auditors should look beyond the traditional approaches to assist their companies in recovering and responding to the situation.

Internal Audit in the Post-Pandemic World

Factors like the organization’s size, business complexity, clients and customers, and the impact of the pandemic create a unique combination of challenges for the audit departments. The recommendations below can be considered while keeping the current circumstances of the organization in mind-

  • Consider Agile Auditing

With many of the organizations still operating remotely, the conventional audit approach might not work as effectively. Creating an agile audit plan that revolves around iterative and fluid planning and focusing on communication and collaboration between the stakeholders and audit team can help organizations better adapt to the new world.

  • Prioritize Backlogged Audits

Now that things are steadily getting back to normal, this could be the time for the audit departments to review their backlogged audits. Prioritize them based on resource availability, regulator focus, risk type, established requirements, and stakeholder feedback. The current audit schedule can then be adjusted to make way for the backlog.

  • Embrace Technology

The use of artificial intelligence, robotic process automation, and data analytics can help auditors remotely monitor and detect corruption patterns and fraudulent activities that are very common in the financial sector. These cutting-edge technologies can also help save time, allowing auditors to focus on other core duties and business functions.

Leading a Financial Institution in the Post-Pandemic World

Internal auditors can consider this pandemic an opportunity to adopt modern ways, adjust their mindsets, and embed the changes to continue growing in the post-pandemic world. Risk advisory services can play a critical role in the process to help organizations mitigate risks and embrace the changes of the modern world in the most efficient manner.

The evolving business environment has magnified the importance of staying updated and thinking ahead. Experienced risk advisors and their vast expertise can assist financial organizations in overcoming the challenges and thriving further.