6 minute read 28 Apr 2020
Covid-19: Ways to lead in uncertain times

How can organizations maintain trust during uncertainty?

By

EY India

Multidisciplinary professional services organization

6 minute read 28 Apr 2020
Related topics COVID-19 Advisory Risk

COVID-19 has forced companies to relook at their risk landscape and evolve faster. With new set of risks emerging every day, Internal Auditors are playing a critical role in helping organizations adapt to uncertainty.

COVID 19 has emerged as a major disruption to business operations impacting employee health, supply chain and demand. This has forced companies to relook at their risk landscape and evolve accordingly. With alternative working models of work from home, use of collaboration tools has resulted in emerging risks being faced by the organizations, most which they may not have considered critical in the normal course.

Now

It’s critical for organizations to align the activities of the Internal Audit (IA) function to enable support and reprioritize their audit strategies accordingly. There should be a higher focus on leveraging Internal Audit to mitigate emerging risks like:

  • Crisis management response and risks emanating therefrom (e.g. lockdown of manufacturing, managing inventory)
  • Risks related to treasury, cash and working capital management (focused on optimization, exposures)
  • Risks emerging due to the work from home model (remote access, reliance on VPN / VDI security)
  • Evolving cyber risk landscape (Unauthorized applications, phishing emails)
  • Contract management and exposures therein (LD, Warranty, force majeure)
  • Data privacy and confidentiality risks emanating from virtual working

Next

Organizations must make the function agile enough while optimizing cost through technology enhancements like analytics and robotics. It is equally important to increase focus on areas that display potential of value unlocking:

  • Continuous controls monitoring through analytics – Aimed at increasing coverage and minimizing effort
  • Inventory management – Management of buildup due to disruption in supply chain
  • Third party risk management (Extended manufacturing providers, payroll, Shared Services Centres)
  • Update to ICFR (Internal Controls over Financial Reporting) and testing of key controls
  • Policy management – focusing on revisions in key policies and their implementation (T&E, flexible working)
  • Assist management in stress testing the virtual working model

Beyond

Digitize the Internal Audit operating model by leveraging technology and redirect manual efforts to more strategic areas:

  • Institute automated and dynamic risk assessment – to identify areas requiring highest attention
  • Consider digital full time equivalent as part of the audit headcount
  • Increase involvement of subject matter expert for critical areas requiring strategic inputs to management
  • Embed digital enablers for IA function for tracking, monitoring and documentation
Internal Audit has a real opportunity to collaborate with the business and enable continuity.
Vishal Ruia
Partner, EY India

Summary

Internal Audit has a real opportunity to collaborate with the business and enable continuity by helping organizations to assess exposure to emerging risks, such as, customer and employee safety, cyber security, supply chain, working capital and internal controls over financial reporting (ICFR) stress.

About this article

By

EY India

Multidisciplinary professional services organization

Related topics COVID-19 Advisory Risk