Remote Auditing: Is It Here to Stay?
The COVID-19 pandemic has had a big impact on the way companies conduct business and audit firms are no exception. Restrictions on the ability of auditors to physically visit business premises have, in many cases, forced them to adopt remote auditing techniques.
Remote auditing is not new. For years, auditors have taken advantage of technology tools to perform some audit activities remotely to save time and money. But the pandemic has substantially increased the need to rely on these techniques.
Related Read: Remote Work May Be Here to Stay — Are You Ready?
Here are five examples of how auditing has adapted to the COVID-19 environment:
- Greater Emphasis on Planning
Auditors and their clients must coordinate the process, especially for activities traditionally done on-site that are now being done remotely. For example, is the technological infrastructure in place to support necessary information and document sharing and verification?
- Increasing Reliance on Cloud-Based Solutions
Before COVID-19, many companies were exploring the benefits of cloud-based accounting software. The pandemic accelerated this trend. Similarly, cloud-based auditing solutions have become a critical tool for managing and conducting audit procedures.
- Expanded Fraud Risks
The pandemic has led to new fraud risks, requiring auditors to reevaluate their risk assessments and, in some cases, modify planned procedures. Potential reasons for a heightened risk of fraud include increased financial pressure on employees and internal control challenges in a remote work environment.
- A Need for Creative Inventory Observation Solutions
One of the biggest challenges in a remote audit environment, especially for clients in the manufacturing sector, is the physical inventory count. The inability of auditors to observe the physical count in person has led to a variety of creative solutions, including the use of body cameras by personnel conducting the count and even the use of drones by auditors.
- Focus on Automation and Big Data
During the pandemic, auditors have relied more heavily on artificial intelligence and other technologies that allow for the automation of certain auditing procedures. Manufacturers enter thousands of journal entries into their accounting systems each month. Fortunately, auditors can use big data technologies to analyze large amounts of data from multiple sources. With the right software and hardware, auditors can quickly analyze all of a company’s financial data, rather than a small sample, to identify risks and anomalies.
Related Read: Manufacturing Evolving from COVID-19
Many of the changes that businesses made to adapt to the pandemic environment are expected to be part of the “new normal” going forward. It seems likely that auditors will continue to take advantage of the efficiencies and cost savings that can be gained by using remote auditing techniques.
For more information, contact Harry Fox at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Manufacturing & Distribution Group.