Impact of the COVID-19 Pandemic on Internal Audit Functions

Impact of the COVID-19 Pandemic on Internal Audit Functions

Impact of the COVID-19 Pandemic on Internal Audit Functions

The world is currently facing an unprecedented pandemic caused by the 2019-nCOV disease. This pandemic has even disrupted the way our society operates and interacts. We are constantly concerned fr the safety and wellbeing of our loved ones from this invisible enemy. In addition, the pandemic has pushed companies and businesses into unknown territories with unforeseen risks and limitations. As such, organizations need to adapt to changes swiftly and be flexible enough to work around limitations. Internal Audit Functions (IAF) are one of the lines of work which faces an uphill battle when it comes to overcoming the shift in the work environment.


Limitation of Communication

Due to this pandemic, IAFs need to be able to adapt to new and everchanging situations at which they have to reassess priorities spontaneously. Communication is an essential part during the planning and reporting phase of internal audit. In order to reduce any unnecessary confusion and problems, audit teams must be effective and timely in their conversation especially with their clients.

Auditors face restrictions when it comes to conducting interviews, accessing confidential data and verifying the authenticity of documentation. Companies that practice manual document system may have difficulties in providing the necessary data for auditing. Scheduling uncertainty is another factor due to compliance requirement imposed by the authorities from time to time and some of the key personnel are working on schedule rotation basis.

Auditors also need to ensure that they have sufficient communication from key auditees via email or phone as communication needs to be arranged well due to the challenges in  performing a physical audit. This is because without sufficient communication, it would make obtaining and verifying information of their business systems, procedures, and internal controls difficult and would further delay the audit process and thus causing the deadline of the audit to be postponed.

Communication is seen to be a challenge for auditors as physical meetings are increasingly prohibited due to the risk of spreading of COVID-19. As such, the increasing usage of technology such as Microsoft Teams, Zoom, Skype are examples at which organizations and auditors around the world uses to bridge the gap in physical communication. This will influence the resources allocation in an audit itself.


IT & Human Resources

When reprioritizing and updating the audit plan, internal audit functions also need to reassess their knowledge, resources and capabilities. Firstly, they should determine whether they have the tools and technology to perform the audit work remotely and securely. Secondly, they need to consider if the auditees are available to work and provide the evidence remotely.

With the pandemic affecting operations and jeopardising work security, this has caused unforeseen inefficacies to crop up in internal audits. Workflow can be improved for both the client and auditors when a time can be committed to conduct the internal audit and resources can be reallocated to other jobs when there is a wait for evidences, creating an agile workforce.

Last but not least, the internal audit function needs to have sufficiently skilled auditors to not only use the tools, but also to help clients assess increased IT threats, business resilience and cash flow and liquidity management risks. We are entering into an era where technology is abundant and critical to operations, in order to work around the current pandemic.

Businesses impacted by the pandemic are also considering the possibility of seeking consultants if they face a shortage in staff or lack of particular expertise.

For instance, digital transformation consultancy services are seen to experience a surge in demand. This is necessary for the survival of business in this period, especially the Small Medium Enterprise’s (SME’s).



Auditors faced more challenges when conducting fieldwork where the travel restrictions imposed. This reduces their ability to perform physical audits, which involves inspecting how a business operates and how to identify key business risks.As such, the travel restriction may affect the quality of the work. Understanding the client’s business, as well as its stakeholders, resources and physical environment is crucial to identify risks.

In addition, limitation of scope in fieldwork can happen due to geographical location and nature of audit scope. Auditors may need to travel to the business premises in order to conduct an operational audit such as production or inventory management scope.

This is rather inefficient when they have to quarantine for oversee assignment. Therefore, the organization may consider co-sourcing the audit to local consultants who able to perform the audit effectively without any geographical restriction.

Hence, added consideration is needed to determine whether all aspects of the fieldwork phase can be performed adequately on a remote basis, in addition to having a good working knowledge of the industry and operational practices.


Internal audit function similarly to other professional service lines have their own challenges due to COVID-19 pandemic. However, the issue arising with communication, allocation of resources, and physical presence in field can all be solved with thorough and holistic planning and understanding of the client’s business. This issue can be solved if the auditees are compliant and are committed towards responding should any questions arise.

IBDC delivers professional internal audit services that add value to your business. Besides, we also offer risk management advisory that helps to improve your enterprise and stakeholder’s value. Contact us today.