Disruption: Challenges for the future

As we progress through the pandemic and re-open offices, more questions emerge. The crisis has been a transformational disruption and, while each country, region, company and individual has had a different experience, there are many issues that have the potential to affect us in the coming years.

Internal auditors will need to reflect on their companies’ responses to the pandemic and the ways in which they have adjusted and coped. Questions around contingency planning, communications and the speed of responses in the early days of lockdown will be debated. However, we must also look ahead at the long-term consequences and how we intend to adapt and evolve to deal with these. This is not just about rebooting business continuity plans. It is likely to entail a fundamental reassessment of our needs and working practices.

One concern hitting the headlines is the emergence of “hybrid working” – the concept that many of those currently working remotely will never return full time to the office. This could change the way we work and live radically. It could also prove divisive and a source of conflict. Already there are worries about how it will affect society, corporate culture and the urban environment.

Governments and companies often favour remote working, which could cut carbon emissions and bills for office space, energy and even tea. City authorities tend to be against it because they fear empty office blocks while smaller towns hope it will rejuvenate high streets.

There are also deeper questions. About 30 per cent of the UK population can work remotely, but they tend to be the highest paid workers. Could this increase social divisions and have far-reaching effects on housing markets? Older staff with families tend to like working from home, whereas young people and those who live alone fear their social lives, training and promotion opportunities will suffer. And there are questions for managers – how do you induct and manage geographically scattered teams? How do you train new employees and nurture a corporate culture? Will remote working affect productivity and innovation – Facebook says no, but Apple thinks yes?

The pandemic brought out the best in internal audit teams. They showed themselves to be agile, resourceful and innovative, implementing changes to planning and processes that will benefit businesses long after the Covid threat has passed. However, we need all this agility and flexibility to rise to the challenges ahead.

Sources of disruption loom on the horizon, from climate change and financial instability to the potential introduction of a Sarbanes-Oxley-style (SOX) regulation in the UK.

Like our members, the institute has been dealing with issues such as remote working as well as seeking to provide services to support members dealing with rapidly changing circumstances and meeting stakeholder requirements to provide critical assurance at this most difficult time.

Some of the things we have introduced in lockdowns we will continue to evolve. We know that we can run successful virtual courses, conferences and awards events. We have continued to carry out external quality assessments remotely – and recent data shows that feedback from our EQA customers has been overwhelmingly positive, despite the challenges of providing assessments during this period.

We have also sought to provide guidance and thought leadership on critical issues affecting our members, as well as facilitating opportunities for members to collaborate, connect and learn from each other. Our Covid-19 Hub has evolved into our Community Hub, hosting information and documents relating to issues as they arise and updating members on developments and debates.

At the moment, we are working on our response to the BEIS White Paper on restoring trust in audit and corporate governance – consulting members and speaking to professional bodies, regulators and stakeholders so we can understand fully the challenges that the proposals in the White Paper present to the profession. In particular, we are discussing the role of internal audit in a UK SOX regime. Should internal audit be responsible for testing, or should testing be done by the first and second lines with internal audit providing assurance?

We have also published case studies and findings from our recent project on the impact of disruption for internal audit. How have members responded to recent challenges, what have they learnt, and what are their thoughts, hopes and fears for the future? And we will be publishing our research reports on financial stability and on corporate culture, as well as following up developments from our case studies on the impact of climate change on the internal audit profession.

Internal auditors have risen superbly to the challenges of the past 18 months, but the pace of change is unlikely to slow. In an issue when we announce the winners of the A&R Awards, celebrating the best performances by teams and individuals, we can be confident that the profession can deal with disruption in the pipeline. However, we will deal with it better if we collaborate and learn from each other and from the experiences we have already survived. 

This article was published in July 2021.