During the post-pandemic transition, many organizations are choosing to adopt a hybrid approach to working. Some will work from the office, some will work from home, and others will flex between the two. This poses a new challenge for internal audit: how to audit when people are spread out in different locations. The answer may be hybrid auditing; this article provides five tips that will help audit teams transition successfully to the hybrid approach.
1. Use an Audit Approach Decision Tree
When deciding how to complete an audit, a new component will be determining if we can even travel. Audit staff may not be able to travel due to restrictions from local authorities, budgetary constraints, corporate policy, unwillingness or availability of the audit team or auditee. Obtaining this level of information could add hours to the planning process, so it’s important to determine how much of the audit scope should be performed remotely before considering on-site work. How much value will be added with the on-site portions of the engagement? Onsite work could be limited to high-risk areas, very manual processes, highly personal work, or cases of suspected fraud.
In other cases, it may be more appropriate to execute audits entirely remotely or in person. In that case, choosing your audit approach could also be determined by a combination of travel capability and the area’s risk level in question. A decision tree below outlines one example of how to determine whether to choose an in-person, hybrid, or remote-based audit.
2. Outsource to Local Resources
One possible outcome of the decision tree above is to recruit local resources. Outsourcing audit work has always been an option, but this approach has changed in recent years. The options group into two categories: internal and external outsourcing.
If there are no local audit staff, there may be other internal resources from parts of the organization that can supplement the team. This could be an internal subject matter expert in the area. Observing through a local employee (e.g., through web meeting) for those audits requiring direct observation could also be a legitimate option.
The more traditional outsourcing model includes outsourcing or co-sourcing with an external firm. Depending on the scope of work, this may be cost-prohibitive. Many teams are now considering freelance auditors. Freelancing was increasing before the pandemic and ramped up even more as a result of layoffs and furloughs.
3. Modernize the Audit Report Delivery
The audit reporting process usually included a very formal meeting with the auditees and senior management, especially pre-COVID. In a hybrid model, moving away from the traditional closing meeting to a more modern process such as distributing a short pre-recorded video and discussing the issues on a shorter web conference could save audit teams time and energy.
4. Change Hiring Practices
Traditionally, many industry internal audit shops have preferred hiring local employees. Recruiting efforts can now be expanded to look for the right people no matter where they live. Some individuals thrive in a remote work environment that limits interaction with an office full of people. Others are energized by the social interaction that comes from coworkers. As a hiring manager, make sure to be up front with any candidate about your organization’s level of openness to fully remote or hybrid work.
5. Update the Audit Performance Assessment
If communication and logistics methods for an audit change, so should the post-audit performance evaluation. When designing the assessment, typical questions might include:
- Was the approach chosen effective for the actual engagement?
- Were there any issues delivering or receiving documentation for the audit?
- Was the team available for meetings during the auditee’s typical working schedule?
- Did the team make use of communication tools to accommodate the auditee and meet the audit’s objectives?
- Were communication expectations established before the start of the audit?
- Was communication between the audit team and management conducted in a format that allowed an adequate exchange of information?
- Did the team engage in regular status updates to ensure the audit would be completed on time?
- Were issue discussions held with appropriate levels of management and appropriately documented?
Remote vs. onsite auditing structure will inevitably come up when discussing these questions and help senior management fine tune their audit approach going forward.
While there are likely additional considerations, these 5 key factors will serve as a solid foundation for audit teams to achieve a successful transition into the world of remote or hybrid auditing. Trial and error with candid evaluations of these approaches will ultimately lead to a new and improved audit environment where teams are maximizing their resources, gaining efficiencies, and adding the most value to the business.