Auditor Challenges in conducting Remote Audits during the Covid-19 Pandemic
The coronavirus outbreak that first appeared in 2019, located in Wuhan, China, has quickly spread throughout the world to more than two hundred countries. With the increase of coronavirus cases that occur every day certainly has an impact on the universal economic downturn, including changes in the auditor’s work mechanism. As a follow-up to this soaring increase of the coronavirus outbreak, the government urges the public to self-isolate and reduce gatherings outside the home. These situations cause not even a few companies experienced a complete blockage that makes auditors face difficulties, especially in terms of access to collect audit evidence.
Facing the development of Covid-19 as well as travel restrictions around the world, the internal auditor ought to find other alternatives to replace the traditional audit which at first requires a face-to-face process. One of the best alternatives is the remote audit process or often referred as remote auditing. The shift to remote work has been made possible by leveraging technology. With the remote audit method, the auditee will be contacted and communicated via the conference service for most of the duration of the audit. It was originally developed to expand audit scope, reduce travel costs, and increase audit time efficiency. Using this method, all activities of audit are held using various platforms such as Webex, Zoom, MS Teams, and so on.
There are several things that need to be considered in the remote audit process, including planning, document review, field physical examination, remote interview, and closing meeting. Planning is the most important stage in every audit which is held with stakeholders to discuss the scope and schedule of the audit. In the perspective of remote audit planning preparation, internal auditors need twice as much time. This also applies to the document review which takes lots of time uploading the data to a file sharing platform, which before the uploading process, it is necessary to convert the file into a certain format such as pdf. Then the physical field inspections such as stock opname or sighting assets become the most challenging points. It is done by utilizing two-way direct communication technology, including the use of livestreaming which sometimes face a threat such as weak signals and limited focus. Therefore, audit planning is important to overcome these limitations.
According to Accounting journal, auditors have faced competitive pressure enhancing audit planning effectiveness. Answering this case, there are four ways to improve audit planning effectiveness and efficiency:
First, don’t rush through the planning stage and jump into the implementation stage for efficiency gains. The planning phase provides an opportunity to increase and maximize both the efficiency and effectiveness of the overall audit.
Second, auditors should understand the company and focus on designing the audit process and obtaining information that helps identify areas of risk.
Third, auditors must evaluate the control of activities. In determining which control activities are relevant, the auditor should focus on the ultimate objective of the audit, which is to obtain reasonable assurance that the financial statements are free from errors.
Fourth, auditors shouldn’t repeat the procedures used in the previous year in the exact same way. Before determining the procedures, the auditor must check whether there are any changes within the company that could affect its effectiveness and whether the previous process had provided useful information efficiently and effectively over the past year.
By focusing on risk assessment techniques and internal control considerations at the planning stage, auditors can adapt their audit approach and save time without compromising audit quality.
Remote auditing presents many advantages such as flexibility, improved communication and fast audit completion time, restore the need for a sense of normalcy, expand coverage, increase document review results, and increase the availability of auditor groups on operational activities. Apart from the advantages, the remote audit process also has limitations. With the process of remote audit, auditors cannot do a direct observation, it also makes it difficult to communicate with the auditee, and it provides the lack of personal interaction that gives huge possibilities for fraud to occur. Responding to the current uncertainty, auditors must be aware of the risks and opportunities of the communication and information technology used and consider the validity and objectivity of the data collected. In addition, the auditor must also have to study the audit by using a computer to compensate for the progress of data processing technology and the progress of financial information applied by its clients.
Technology capabilities of clients and staff can be a significant challenge because it really determines the audit quality. Therefore, because most modern information systems use information technology, the information technology audits become an essential component in all external and internal audits. The use of information technology causes traditional auditing to shift into continuous auditing. As the current business process is dominated by IT/IS applications, continuous audit therefore provides timely and reliable information, shortens audit cycles, reduces costs, and drives positive social impact. Compared to manual data processing, computerized information systems have the advantage that it takes less time for a company to produce information because it can process data more quickly and easily.
While the audit process was already evolving with the advent of new technologies and rising investor expectation, covid-19 has significantly accelerated the move to “virtual auditing”. Due to workplace closures and the need for physical distancing, auditors are using new technologies to conduct audits remotely, from remote data extraction and data analysis to inventory counts using drone technologies. These new ways of working must be done in aim to establish standards and provide security to those involved. This situation has given markets and regulators confidence that the quality of audits has improved in a better way. Going forward of the auditor’s journey, auditing needs to evolve into a cooperative, multidimensional process, where self-assessment is valued, and improvement is encouraged and welcomed.
