Audit

Half of internal audit teams affected by Covid-19 redeployment

Redeployment during the coronavirus lockdown has affected 46% of UK internal audit teams, according to the latest Internal Audit in Lockdown report by the Chartered IIA. 

The latest report surveyed chief audit executives, and examined the impact of the pandemic on internal audit functions across all sectors during lockdown.

It found that a “significant” number of audit professionals were unable to carry out critical internal audit work during the coronavirus lockdown.

According to the Chartered IIA, this sparked “particular concerns” given the business risks exacerbated as a result of the crisis, including cashflow and liquidity, cybersecurity, and fraud. 

In addition to those redeployed to other parts of the business, around 15% of internal audit teams were affected by furloughing, according to the study. 

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Some 35% of respondents added that their audit committee chair had not been consulted on the decision to redeploy or furlough, “raising additional concerns from a governance perspective”.

Nonetheless, the research also highlighted the ways that internal audit has responded to the crisis, through providing real time assurance with regard to “new processes at a critical time”. 

It comes as more than a third of chief audit executives said that their teams’ working hours had been increased to meet the demand for independent objective assurance.

John Wood, CEO of the Chartered IIA, said: “Today’s research demonstrates just what a profound impact and disruptive effect the coronavirus crisis has had on corporate governance across all sectors in the UK. 

“While I applaud the ways in which the internal audit profession has adapted and shown resilience in the face of these challenges, there are some alarming findings which suggest critical work has not been undertaken during lockdown.”

He added: “Given the bleak economic outlook for the year ahead and beyond, I would urge boards and audit committees up and down the UK to take stock of these findings, and ensure that they have a robust risk management, governance, and internal control framework in place.” 

It comes as the Chartered IIA is calling for a number of measures to be introduced to strengthen corporate governance, such as a strong audit regulator to oversee good corporate governance across the UK. 

John Wood said: “These findings underscore the urgent need for the Government to accelerate the pace of audit reform in the UK to help strengthen corporate governance as a whole.” 

Sir Jon Thompson, CEO of the Financial Reporting Council, said: “The Chartered IIA’s review is a timely reminder of the need for robust risk management processes and high quality corporate governance during times of crisis. 

“Internal audit is a key part of the UK’s corporate governance framework and this report highlights a number of important issues faced by internal auditors from the Covid-19 pandemic to the wider audit reform agenda.” 

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