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The changed reality makes not only entire companies, cities, countries, the world change, it also makes us, ordinary people, change. The purpose of this article is to guide internal auditors to take action now, in response to the challenges that COVID-19 has posed for all of us.
The acute phase of the COVID-19 coronavirus infection pandemic, according to various expert estimates, may last until the end of 2020, while the economic consequences of it will be felt for a long time (at least on the horizon up to 3 years).
In recent decades, the world has faced a considerable number of local (default in 1998) and global crises (crisis in 2008).
But no previous crises have been as deep and systemic as the current one. For example, during the 2008 mortgage crisis, many people lost their jobs, banks and other companies in the financial sector went massively bankrupt, but although most people experienced the economic consequences of the crisis, in general, life went on as usual.
The current crisis, in addition to the bankruptcies of a significant number of organizations, threatens the life and health of people.
In these conditions, the classic functionality of internal audit is subject to revision, given that in such a rapidly changing environment, a look into the past and analysis of historical data, as well as recommendations for improving the internal control system may no longer be relevant either for business owners or for management.
The advisory function comes to the fore, allowing an independent assessment of the response to the crisis, as well as the assessment and implementation of anti-crisis measures carried out by the management of companies.
Internal audit should participate as independent observers and testers in the development of various stress scenarios, with special attention should be paid to all identified deficiencies and a set of measures to control their elimination.
Based on the results of the measures taken, the retail audit companies give confidence to the stakeholders about the readiness/unpreparedness of the organization to continue its activities in a crisis.
In case of unavailability, a second check should be carried out after the management has eliminated all the identified comments and deficiencies.
What does internal audit do when the crisis hits?
As mentioned above, the liquidity reserve during a crisis comes to the fore in many organizations.
The following questions arise: “How long is the company able to make payments on wages, rent payments, etc.? before the cash gap? What actions need to be taken to keep liquidity at an acceptable level until the peak of the pandemic passes and society returns to normalcy?
Retail audit companies in India has several opportunities to help the management of the company answer the urgent questions facing the management. However, some of the activities may cause loss of function independence in the short term.
The annual plan, approved a few months ago, before the start of the pandemic, most likely has lost its relevance. The owners and management of the company are now faced with the task of survival of the business, everything else does not matter.