During the periods of lockdowns and social distancing the traditional audit process became more difficult. But with good preparation and the right technology, a remote or virtual audit could still take place. Thankfully, we have now emerged from this unprecedented period of turmoil and at last things are becoming easier again.
Do you need to be audited?
It’s worth checking if your business needs to be audited. Are you a medium sized company, part of a larger group or have your shareholders requested an audit? Speak to your accountant and find out. We often advise our clients to consider the benefits of having an audit, even if it’s not mandatory.
With added financial pressures as a result of the economic environment, understanding the financial health of your business is vital. You may now find that you have more of your staff still working remotely. If everyone is following different processes and procedures, an audit can bring an independent review to ensure that the key systems and controls within the business are operating effectively. Auditors also bring with them a wealth of experience in assisting businesses navigate through the various financial, operational and compliance regulations that companies face.
What is a virtual audit?
Usually, an audit is done in person. Auditors visit your office, conduct interviews and check your paper or online files. With lockdowns and calls to work from home if possible, the process had to adapt.
More business owners have become used to a virtual or remote audit, using video conferencing, such as Zoom, email and telephone to gather the evidence. Your auditor still needs the same information as they would get on-site, so technology has had to play a part in filling in the gaps. It’s important that a virtual audit still asks the relevant questions and is a collaborative process.
Fortunately, there are file sharing tools and cloud accounting software that made a virtual audit possible. If you’re still using self-hosted software this can be a great time to consider switching to a cloud accounting solution.
Not only does it make it easier to keep on top of your accounts, it saves you time. It gives you:
- 24/7 access to your finances
- Better cashflow
- Easy-to-claim expenses
- Instant budget reports
Disadvantages of a virtual audit
- It’s not the same as being there. The role of the audit is to ‘get under the bonnet of your company’, this is much more difficult to do remotely.
- Audit is a collaborative process between the auditors and the people that run a company, human face-to-face interaction is a far better medium for discussing issues, solving problems and finding solutions.
- Although technology enables virtual audits to happen, poor connectivity is also one of the problems. We’ve all been on a Zoom call where someone freezes, sounds like a robot or loses connection.
Will hybrid audits be the future?
A virtual audit is by no means a perfect solution and is really a last resort. It should only be used if your accountant is certain that the audit objectives can be met. It shouldn’t be used because it is considered in some way cheaper or less of a logistical exercise.
For established and lower-risk audits, a virtual or part-virtual audit could certainly be the future.
A hybrid audit, which retains face-to-face contact and a visit to some sites could certainly be the future. The growing capability and uses of technology will drive the popularity of hybrid audits. Cloud accounting software has many benefits and aiding audits is one of them.
Maintaining a good relationship with your auditor is also important. Perhaps audits will rely on less time on site, with more being done online. So, finding innovative ways to really understand the business and how it works will be key.
Is your auditor being flexible enough?
Having a good relationship with your auditor will no doubt help when audits are done remotely. If your auditor isn’t able to offer a more flexible approach to your audit, perhaps it’s time to look around.
Your auditor will need to communicate clearly with your business about what information they’ll need. Setting out the expectations and scope of the audit up front is important too. Clear communication about the requirements of your business and when information will be needed by will help.
THP worked hard with clients to find ways to audit during the lockdown. And as we look ahead to the coming years, it seems some aspects of the virtual audit process, certainly those that drive efficiency, can and should remain.
About Andy Green
As Client Director Andy Green works primarily in delivering audit and assurance services, particularly in the Retail and Technology Sectors, as well as being the firm’s Compliance Director. These roles both bring great responsibility in ensuring that the outstanding quality and reputation of the firm is maintained.
After training and qualifying with a mid-tier firm of Chartered Accountants in the City, Andy spent some time in investment banking before joining THP in 2008, a move driven by his desire to get back into the profession. “The beauty of working for an accountancy practice is that every day is different – and you’re constantly achieving successes for your clients.” With Andy’s natural ability in interaction, THP is the ideal place.
With his positive drive and sense of humour Andy works with an array of clients, giving each the ultimate attention no matter what the size of their company.