In this article, you will learn:
Coronavirus pandemic has changed the way businesses and accounting professionals are working across the globe.
Social distancing, lockdown, and travel bans undertaken by the government have made firms resort to remote work.
Although such measures were mandatory to contain further spread of COVID-19, these have impacted the statutory audits undertaken by the auditors in India.
Listed companies are bound by the law to undertake annual as well as fourth-quarter statutory audits each year between March and May.
Further, such audits may last for several weeks and involve auditors visiting the client premises for physical inspection.
Physically visiting the client site is an important part of auditing for it helps to identify issues like fraud or any wrongdoing on the part of the clients.
Non-verbal cues such as the facial expression of the company’s manager, outdated technology, and the fatal cultural vibe help the auditors to know that something is out of order.
However, these non-verbal cues that are easily identifiable in a face-to-face meeting may not be possible virtually.
That’s the reason, auditors undertaking remote auditing need to be extremely careful and make sure that they are adopting the right technologies to avoid such errors and maintain the standards.
In this article, you will learn how to conduct remote auditing effortlessly amidst a crisis.
Use of Right Technologies
As mentioned above, auditors need to assign a team for its various clients to undertake a physical inspection of company accounts. However, measures such as social distancing and lockdown have made it difficult for the auditors to assign such auditing teams.
Now, this is where technology can enable auditors to undertake the auditing process effortlessly.
Access ERPs of Clients
For instance, wherever possible, have access to the company ERP of your client firms via a VPN.
This will enable you to have access to all the necessary documents needed in the process of auditing. But this comes with a caveat that all the necessary documents such as invoices, vouchers, expense receipts, etc must be uploaded by your clients in a proper format.
This is because if proper digitization of the documents is not done by your clients, it will act as a block as you as an auditor would not be able to do auditing successfully due to lack of information.
Go For Videoconferencing
Likewise, you can use videoconferencing to communicate with your clients and to have live face-to-face interactions. These live interactions would enable you as an auditor to get those visual cues much like the ones that are observed when undertaking the physical inspection.
Digitization of Documents
Reviewing documents when undertaking remote auditing can be much like the reviewing of the documents when inspecting documents by physically visiting the client site.
However, you as an auditor need to keep certain things into consideration to ensure that documents under remote auditing are reviewed seamlessly.
Ask Your Clients to Digitize Documents
First, it is important that your clients convert the records of the requisite documents into a reviewable format and upload the same on their ERPs or cloud computing software.
Although it may take them some time to do so, it will enable you as an auditor to have access to those documents easily.
Secondly, make sure that you are flexible when it comes to receiving the documents in a format that can be easily maintained by your clients.
This will put less burden on your clients for they will not have to invest more time in converting the records or the documents in a specific format as desired by you.
Access Client’s ERP Temporarily
Thirdly, as mentioned above, it is always better to ask for temporary access to the clients’ digital file system where the clients store all their documents.
Typically, clients give access to their digital file systems on a temporary basis for the time period for which the audit takes place.
Formulate Effective Reviewing Strategies
Next, always formulate effective strategies for reviewing data when undertaking remote auditing. For instance, if the documents to be reviewed are large in number, you can go for sampling.
Therefore, whatever strategy you adopt to audit, that is, reviewing complete data or reviewing partial data, make sure that you communicate the same to your clients so that they provide you with authentic information that aligns with your strategy.
Take Note of Questions
Lastly, unlike a physical audit, it is not possible for you to ask questions simultaneously when undertaking remote auditing. Therefore, make sure that you take note of the questions you need to ask your clients when reviewing documents remotely.
This will help you to ask them these questions later during the interview. However, with videoconferencing technology, you as an auditor can simultaneously review documents and ask questions as this technology enables you to communicate and share documents in real-time.
Use Secure Cloud Computing Tools
Much like videoconferencing, there are a host of project management tools that help you to share important documents in a secure manner.
Your clients can share documents with you and you can review the same and pose questions to clients if any all in real-time.
Furthermore, these tools allow you to have limited access such as read-only documents pertaining to client’s accounts, payroll, etc. This enables you as an auditor to undertake auditing in real-time.
For instance, such access to client documents enables you to keep a track of the client data by a simple login and without involving the client each time.
Thus, the surprise element that is the very essence of the audit to avoid the risk of fraud can be replicated with the help of such cloud-computing tools.
Use Alternative Ways To Audit Inventory
Checking as well as valuing inventory is an important part of the audit process. This is because a large portion of the company’s funds is invested in different types of inventory and its management.
Company inventory could include raw materials, work-in-progress, and finished goods. Hence, given such a period of crisis, it has become challenging for auditors to visit the client site and take stock of inventories.
Therefore, auditors need to figure out unique ways in which inventory audit can be conducted. For instance, auditors can check the client inventory through live videos wherever possible.
Or else, they can depend on the accounting information provided by the management only if the management has a credible history of maintaining books of accounts.