Like so many other fields, financial auditors began working remotely during the pandemic. While audits used to happen in your office, the switch to virtual can be efficient if organizations and auditors follow a few simple best practices.
It has been more than a year since we all had to learn how to pivot and live and work in the new normal due to the pandemic. Just about every business made adjustments, whether it is limiting capacity, curb side pickup, virtual doctor visits, and of course, remote work.
This new normal has also affected the way accounting firms perform audit engagements of their clients. The pre-pandemic approach consisted of an audit team showing up on Monday, setting up camp in the conference room, and usually causing controlled chaos within your organization for three to five days or more.
Now auditors have switched to the remote or virtual audits consisting of Zoom meetings and interviews, communication portals, and the electronic exchange of information have replaced face-to-face interviews and boxes and boxes of paper. If you have not been through the remote audit process, understand it’s simply a virtual twist on the original audit.
Here are 5 best practices that can help your virtual audit process go smoothly.
Revisit internal controls. Prior to the audit starting, you should revisit internal controls that were in place pre-pandemic and determine if they are still accurate or provide the required level of checks and balances, control, and oversight now that employees are working remotely, and more information is electronic and/or signatures and approvals are electronic. If changes are needed, update the accounting policies and procedures manual.
By moving to a virtual audit, as an organization, you don’t need to host the audit team for days, interrupting your day-to-day operations.
Get your files ready. Your auditors should request the trial balance, general ledger, and several other items at least a week before the audit is scheduled to begin. This will allow the audit team time to make sample requests and submit them to the client, allowing the client time to pull, scan, and submit them prior to the audit work beginning. This will greatly increase the efficiency of the audit.
Treat it like any other audit. You should treat the days scheduled for fieldwork just as if your auditors were actually onsite and dedicate those days to the audit. During the early stages of a remote audit, it is easy to take an “out of sight, out of mind” approach to the remote audit. But doing so can cause the completion of the audit to take longer than an in-person audit since documents are not being provided promptly. (For more information, see who does what during an audit.)
Remote doesn’t mean zero interaction. Just because the audit is being performed remotely doesn’t mean there shouldn’t be any interaction between you and your auditor. We recommend at least one Zoom call between the audit team and your organization for general introductions, as well as a discussion of the audit approach, your current financial and programmatic situation, and the timing of the draft financial statements. Additionally, we recommend a daily status update email from your auditor to your team at the end of the day.
Sometimes a phone call is best. Even though most of the information for the remote audit is transmitted electronically, sometimes things get lost in translation. When this happens, we recommend the audit team pick up the phone or set up a Zoom call so we can share screen and communicate directly with the client. Almost every time, that phone call or Zoom meeting will result in the issue or confusion being resolved in a fraction of the time that it would have taken multiple emails or instant messages.
Both your team and the audit team can benefit from a remote audit, if the best practices are fully utilized. The most obvious benefit is less disruption to the organization and your team. By moving to a virtual audit, as an organization, you don’t need to host the audit team for days, interrupting your day-to-day operations.
Additionally, by not working onsite, the audit team now has access to all the tools in their office: multiple monitors, high-speed internet, scanners, and so forth. All of these tools can make the process more efficient, which leads to a faster turnaround time of your organization’s financial statements. The elimination of travel time also reduces the direct expenses billed to your organization.
While virtual audits aren’t new, they are a growing trend that is gaining traction. Don’t let the pandemic be an excuse for why the audit didn’t happen. Instead, embrace remote audits and turn it into an opportunity for improvement and growth.