Survey Reveals Growing Issues Facing Internal Audit Profession Due to COVID-19

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A new survey published by accounting and advisory firm Frazier & Deeter reveals that many Internal Audit teams are expanding their scope while reducing their resources as they help their organizations monitor risk in an era of unprecedented risk escalation.

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The need to understand and manage risk has never been greater, but competing priorities and resource reductions have stretched internal audit teams very thin.

Frazier & Deeter, one of the nation’s largest accounting and advisory firms, has published the results of a national survey of Internal Audit professionals. The survey was conducted in late May and early June and was developed to provide insight regarding the impact of the COVID-19 pandemic on the internal audit profession. The survey expands on insights that were published by The Institute of Internal Auditors in late April.

Key findings of the survey include:

  • 75% of organizations cited “negative” or “Extremely negative” financial impact of COVID-19. Respondents in the Hospitality/Gaming, Retail/Restaurant, Transportation and Manufacturing/Distribution industries were most likely to report a negative impact.
  • In response to changes in risk profiles nearly 90% of organizations had modified their audit plan, often adding new audits while reducing the scope of other audits.
  • The most common areas of increased focus were IT/Cybersecurity and Business continuity.
  • 45% had redeployed Internal Audit staff to address needs, including COVID relief loan compliance and business continuity.
  • 26% had reduced resources, either through a furlough, a layoff, or reduction in the budget for outsourced resources. This trend had increased since April when only 21% had reduced resources.

“Internal Audit teams are facing a perfect storm this year. The need to understand and manage risk has never been greater, but competing priorities and resource reductions have stretched internal audit teams very thin,” noted Sabrina Serafin, National Practice Leader of Frazier & Deeter’s Process, Risk & Governance practice.

“Adapting the Internal Audit Function in the Era of COVID -19 is timely and highlights the agility and adaptability of the Internal Audit Profession,” said Bill Mulcahy, CEO of Mulcahy Consulting and past president of the IIA Atlanta Chapter. “The Frazier and Deeter PULSE REPORT July 2020 appropriately highlights the successful adjustments Internal Auditors are making by increasing our presence in areas such as IT, Cybersecurity and / or Data Privacy.”

Comments from Chief Audit Executives include:

  • [We] Have increased productivity due to work from home.
  • Being flexible is always important for Internal Auditors. Having an Audit Committee meeting via Zoom and speaking to Mayor and City Council via Zoom are things I never imagined, but flexibility was needed, and now I've done it flawlessly.
  • Internal Audit was valued prior to COVID, and we've found ways to continue to add value.

“The agility of audit functions is being tested to the fullest, with nearly every audit plan being adapted to address the new environment with its emerging areas of risk. We expect audit plans to continue to evolve as organizational strategies and forecasts are updated,” noted Jason Sammons, a Partner in Frazier & Deeter’s Process, Risk & Governance practice.

The survey reflects the responses of 125 Internal Audit professionals from 22 states and a wide range of industries and company sizes. The top industries represented included Banking/Financial Services (24%), Technology (14%), Hospitality/Gaming (12%), Manufacturing/Distribution (12%). Respondents were relatively senior, with 42% either Chief Audit Executive or Vice President. 62% of respondents represented publicly traded companies.

About Frazier & Deeter

Frazier & Deeter is an award-winning accounting and advisory firm headquartered in Atlanta, Georgia, USA. The firm provides a wide range of tax, audit, accounting and advisory services to serve the emerging needs of clients as they evolve. Frazier & Deeter and its FD family of brands have nine offices across the United States and one in the United Kingdom. The firm has been recognized repeatedly as a Best of the Best Accounting firm, a Best Firm to Work For in the U.S. and a Best Firm for Women in Leadership. Frazier & Deeter’s brand promise is investing in relationships to make a difference™.

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Adelle Erdman
@frazierdeeter
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