Covid-19 had a significant impact on all aspects of life after its outbreak and the resultant lockdown of March 2020. We had to find new ways to perform audit work in the absence of fieldwork visits by our staff, which was difficult due to government guidance on social distancing throughout 2020 and 2021.
One of the main consequences of the pandemic was a societal shift to working from home. Nearly three years on this has led to differing hybrid arrangements for our clients and staff, which look set to stay into the future. As a result, we have entered the world of remote auditing, relying on electronic access to client systems and records to facilitate the audit.
During the pandemic this initially provided challenges both for us and for our clients. However, in the wake of changing mindsets and improved efficiencies we are now seeing significant numbers of audits either being remote or having a hybrid element with a few days allocated for site visits.
Remote working has been made possible due to five main considerations:
Planning
Early discussions are essential in identifying potential issues for provision of audit information, whether that be making arrangements for access to your company’s bespoke accounting software, stocktake attendance or provision of physical records. Early identification of issues gives additional time to find solutions, which improves the efficiency of the audit, reducing the burden on both audit and client staff.
IT Systems access
For an efficient audit it is essential that the auditor has direct access to your accounting software to minimise disruption to your finance team. For companies using cloud accounting software such as Xero or QuickBooks online this is very straightforward, but where bespoke software is used, engaging with your internal IT team or IT service provider may be necessary so that remote access to your data (via VPN for example) can be provided to the audit team, in the same manner as you may already provide to staff to facilitate them working from home.
Purchase invoices
Historically the audit team would review hardcopy invoices and take copies of those needed for the audit file while on site. Several of our clients have gone paperless in recent times, meaning all invoices can be reviewed remotely by the audit team and many have found this improves their own internal efficiencies as well as improving visibility for the finance team. Where hardcopy records are still relied upon, we have required the client’s staff to scan copies of invoices to us which has increased their workload in already testing times.
HR records
Testing of controls over payroll and detailed review of employee records is often a key part of an audit, which can raise GDPR concerns related to provision of confidential information over the internet. Throughout lockdown we have been utilising our secure cloud portal to transfer sensitive data to mitigate these risks. Where HR records can’t easily be provided electronically, we have arranged remote reviews using video calls with client staff to obtain the information needed for the audit.
Effective communication
Remote audits must ensure effective communication is maintained, even without constant face-to-face communication. Teams have adapted by planning in regular Teams or Zoom calls during the audit fieldwork phase. Whether this be daily or a couple of times a week. This ensures everyone involved is kept up to date with progress and is notified of any issues coming out of the work. In addition, daily round up emails showing current outstanding issues and progress through the fieldwork enables open dialogue and makes everyone accountable for the progress of the audit.
Summary
Despite the end of social distancing and restrictions, remote auditing is likely to continue for a variety of reasons. It often fits better with the client’s schedule, enabling them to catch up on audit requests whilst the teams are offsite. In addition, some offices can’t accommodate a large audit team on site; having a small number of people for a couple of days is more manageable.
Manager
Many companies will have experienced remote auditing during 2020 and already implemented changes to make the process easier in future periods. Those who haven’t should consider the likely impact on their audit process and what changes to systems could be implemented now to reduce the burden of the annual audit on their finance departments.
If you would like to discuss any aspects of remote auditing, concerns over systems access or implementation of paperless accounting systems, then please get in touch with your usual RG contact.