Remote Audits are Here

Introduction

Covid19 has changed our lives to a great extent, most probably forever and by all possibilities irreversibly so. An organism that is a thousand times smaller than an average human cell has left a huge impact on our lives, lifestyle, livelihood, and what not!

Sounds a bit exaggerated? Maybe, but all of us would agree that Covid19 has affected each one of us in one way or the other. It has changed the way we live, work, and interact with each other. It has devastated many economies and the time required to require and to get back to normalcy is something no one can assess at this point in time.

Business Impact

It has affected enterprises across the world. It has affected business models. As I recollect reading somewhere it has powered innovations, or dare I say 'forced'!

The top line and bottom line for many businesses have been impacted considerably. Cost control more than anything else has been the order of the day everywhere. What was a necessity yesterday has become a luxury today.

Impact on Internal Audit

This has indeed affected Internal Audit as a function as well. Controlling costs even if it is at the cost of reducing "Controls" seems to be an acceptable conclusion for many. Assurance seems to have been moved downwards in priority and spends on IA has also seen a downward revision.

There are some organizations where it is not so as well, but in those places, the ability of the IA teams to effectively conduct Audits as per plan has seen setbacks.

Especially in Industries/Sectors/Domains where Audit involves a considerable amount of travel, there has been a lot of impact on Audits, as the ability to travel is affected by the Pandemic. Things are getting better (?) but have it come back to normal? When will it come back? The answers seem to be lurking.

The way forward

Can there be a way forward in which the Audits are done as per the required numbers and there can also be a control over the costs? All of us are thinking about this.

These questions came up in multiple discussions that we had with our clients as well as prospects. A wild concept (something which would have been considered impractical and insane before Dec 2019) which was there in some corner has come to the fore. An idea that can make things happen; may not be as good as how it was, but definitely worth a try.

REMOTE AUDITS

The concept of Remote Audits is not new but was not considered practical or 'enough' sometime back. But in today's scenario, this would be the best-suited solutions for organization/sectors where the number of Audits to be done, is on the higher side and the cost is also considerable. Microfinance, NBFCs, Banks, Franchise Stores, Retail Outlets, Food Chain stores, etc., could well, look at the possibility of Remote Audits.

The idea is all about enabling the interaction of the Auditor/s with the Auditee/s in a near to real-life scenario. What if the Auditor can interact with the auditee over a Chat, a call, or a video call?

What if he can ask for the required information through this channel? What if he can confirm if the auditee is interacting from the designated location (if that is required) all through a secured enterprise-grade software?

It is indeed a game-changer. It keeps the audits going, it keeps the assurance going. They say something is better than nothing, but here it is a lot of things, very near to everything.

For sectors like Microfinance, this can well be extended to Centre/Group/Customer Audits, subject to availability of a smartphone with the customer, and with any member of the group or center.

For banks and NBFCs this can be extended to Customer Verifications pre/post disbursal, or Loan Utilization Checks.

Remote Audit is here to stay!

A few years back when we spoke of Audits happening through smartphones/Tabs, we saw some smiling faces, but today it is a reality. Similarly, Pandemic or no Pandemic, Remote Audit as a concept is a reality that is staring us at. With some amount of planning and Risk profiling of the Auditees, the cost of Audit can be controlled by a great margin by adopting Remote Audits. Visits may still be required, but for a select set of Auditees, where the profiling indicates higher risk or there has been a trigger raised by a set of suspicious transactions, a volume spike, or a mismatch in information.

It is a concept well worth considering in my view. What do you think? Please share your views.

If you are already convinced with the idea and want to check-out how you can adopt this, please inbox me or write to us at reachus@audit360.in.

‍