Almost half (46%) of UK internal audit teams have been affected by redeployment during the Covid-19 lockdown, according to a survey of chief audit executives in a report published by the Chartered Institute of Internal Auditors (Chartered IIA).
The data highlights that a significant number of audit professionals have not been able to carry out critical internal audit work during the coronavirus lockdown, which has raised particular concerns given the business risks exacerbated as a result of the pandemic, such as cashflow and liquidity, cybersecurity, and fraud.
Chartered IIA chief executive John Wood said: “Today’s [15th September 2020) research demonstrates just what a profound impact and disruptive effect the coronavirus crisis has had on corporate governance across all sectors in the UK. While I applaud the ways in which the internal audit profession has adapted and shown resilience in the face of these challenges, there are some alarming findings which suggest critical work has not been undertaken during lockdown.
“Given the bleak economic outlook for the year ahead and beyond, I would urge boards and audit committees up and down the UK to take stock of these findings, and ensure that they have a robust risk management, governance, and internal control framework in place.”
The publication of the report follows the Chartered IIA’s submission to the Business, Energy and Industrial Strategy (BEIS) Select Committee inquiry on delivering audit reform, calling on the Government to accelerate the pace of audit reform. The Chartered IIA has called for a number of measures to be introduced to strengthen corporate governance, particularly given the impact of coronavirus, such as a strong audit regulator to oversee good corporate governance across the UK.
Wood said: “These findings underscore the urgent need for the Government to accelerate the pace of audit reform in the UK to help strengthen corporate governance as a whole. Time for reform is well overdue and given the myriad challenges facing businesses, it’s imperative that a comprehensive package of measures are introduced to help boards and audit committees ensure that new risks are promptly identified, mitigated and managed.”
Financial Reporting Council (FRC) CEO Jon Thompson said: “The Chartered IIA’s review is a timely reminder of the need for robust risk management processes and high quality corporate governance during times of crisis.
“Internal audit is a key part of the UK’s corporate governance framework and this report highlights a number of important issues faced by internal auditors from the Covid-19 pandemic to the wider audit reform agenda.
“The FRC encourages boards and their internal auditors to carefully consider the report’s findings and recommendations.”