“There’s nothing like a pandemic to get people to focus on risk management,” says Mal Sivapunniyan, Director of Risk and Audit at Dentsu Aegis Network.
The organisation employs approximately 40,000 people across the world in media, creative and branding agencies. The internal audit team travels internationally, but when COVID-19 began to spread globally, it had to respond fast.
Sivapunniyan banned travel for the internal audit team early in March when she saw how rapidly the virus was spreading. “We were suddenly faced with a new business risk profile and had to perform our audits remotely while management were extremely busy and putting in place a series of cost measures,” she explains. “We needed to ensure that any audit we did was essential to the business, so we changed our audit plan and embarked on shorter, sharper reviews for the audit committee to ensure we still provided assurance over key risks.”
To some extent, this felt like a return to the basics, because the main risks in the new environment were mainly in traditional risk areas such as opportunities for fraud and the way in which the organisation collected and managed its cash. “I had to explain to the team why this was now our priority and what we needed to do now,” Sivapunniyan says. “We came up with a set of audit procedures we could do across a number of our markets and focused on how we could turn around short reports highlighting all the key issues within a few weeks.”
The crisis therefore prompted the team to work differently and to produce a different kind of report. It proved an interesting experiment in how to change rapidly while under pressure and Sivapunniyan says they intend to learn from the experience. “We need to see how it works and how our auditors and stakeholders view the new-style reports. If they like these and find they add value then we may continue to do them when we go back to some kind of business as usual,” she says.
What will this “business as usual” look like for the business and when will it happen? “I don’t know yet, but I don’t think things will be the same as before the pandemic. The crisis is likely to make us think a bit differently in future,” she says.
The main changes are likely to be to the group’s risk profile and risk management, rather than to its internal audit methodology, she adds. The crisis will certainly change the audit focus and audit plan for the coming year, but there is a long list of risks that will have fundamentally changed and may continue to evolve as new working practices develop.
Sivapunniyan points to risks around remote working and hygiene controls in re-opened offices. “Health and safety has never been a particular concern for us because we are office-based so only have the day-to-day risks of an office environment, but we now need to reassess our offices and keep watching for new legislation governing how our people can work safely in shared spaces and client spaces.” This could also have an impact on the organisation’s property needs.
Audit delivery is also likely to change, depending on feedback from senior management on the changes we have implemented so far. One significant change for the audit team is the current ban on international travel. The group is based in three key regions – Europe, Middle East and Africa, Asia Pacific, and the Americas.
“Not being able to travel makes a big difference to our audits – we don’t get the same responses if we can’t meet people face to face. A number of our processes are automated, which makes it easier, but a few are still paper-based, and we also have language barriers and bandwidth problems in some countries that make things harder,” Sivapunniyan says.
Jessica West, Senior Manager at Dentsu Aegis Network, agrees. “You need to be able to observe people in the office to see how teams work and what the environment and atmosphere are like,” she says.
Both agree that the pandemic has taught timely lessons on the importance of getting all available documents online, however it is also highlighting the importance of softer auditing skills and these are much harder to replicate at a physical distance. Video technology is good and is improving, but it is not a complete solution.
“Qualitative observations are so important that I think we will go back to travelling as soon as it’s safe and people feel comfortable doing it again,” Sivapunniyan says. “But we may not go back to being able to travel as much as we did previously, at least not for a long time.”