View from the institute: Recovery - focus on the future

For the past year, internal auditors have looked to the present – fighting fires, “mucking in” to support the business, conducting emergency reviews and mini-audits. The Institute has also worked hard to support members at this difficult time, offering guidance and a variety of platforms on which to share hard-learned experience. We’re not out of the woods yet, but now we need to focus on the future.

While we hope that we are on the way to recovering from the pandemic, we are facing a year of multiple crises and uncertainty, from economic recession to post-Brexit deals and climate change challenges. Resilience was a key theme throughout 2020 and it will continue to be so in the coming year – but we need to adjust our focus, build on what we’ve learnt and new relationships we’ve formed and look at how we can use these to improve what we do for businesses in the years ahead.

One concern should be our people and their skills and talents. COVID-19 transformed people’s lives, and such social upheaval has long-term effects on individuals’ wellbeing and priorities. This will affect internal audit functions and businesses in two ways: which skills will they need to operate in the changed business environment? And what do members of your team and employees in the wider business want in their working lives? Both may have changed significantly since 2019.

Flexible working and remote working look set to stay for many office jobs. Some people will have reassessed their priorities and changed their long-term ambitions. Others will be keen to return to a more social working life. Meanwhile, business models have shifted, and auditors have been quick to adopt new ways of working and to provide assurance faster and more responsively. In some organisations, the internal audit “button” is being reset to a new base level. This may affect the skills required in their teams and in those they recruit. Others will need to look closely at what these internal audit teams are doing – it is likely to influence stakeholder expectations.

To some extent, this accelerates existing trends, but it means that interpersonal skills, the ability to relate to stakeholders effectively, proficiency with IT systems and commercial acuity will become ever more essential for internal auditors. As we discussed in the last issue of Audit & Risk, heads of audit should put talent management and planning at, or near the top of, their agenda. They should be talking to their teams and asking people about their views and their objectives – urging them to be honest if these have changed. No manager can satisfy everyone, but understanding where people are coming from and where they want to go will help to hold on to them.

Internal audit needs to look afresh at opportunities for development. Now is the time to review requirements and consider talent supply chains. If we cannot develop the skills we need in future, or if a key person leaves, where will we get their replacement from?

“Resilience” has been a critical issue throughout the past year and this will not change, but what it means in practice shifts, both in developing a resilient team and a resilient business. As a CEO, in times of uncertainty I look for the things we can control and ask whether managing these can help the organisation be more resilient when it faces events that are beyond our control. 

Talent is one such issue, and so is cash. Cash provides flexibility, which will be a vital asset in the recovery, yet it is often misunderstood or neglected. Internal audit should ask key questions – is the company stable and sustainable?

It’s also important to remember that resilient does not mean reactive. Opportunities are as important in surviving disruption as threats, and your business’s future may be brighter if the organisation is able to make strategic acquisitions and do deals now. Ensuring that management understands the organisation’s risk profile and appetite and has meaningful assurance on critical areas, including financial sustainability, will help them to move swiftly when the time is right.

Which brings us back to people. To thrive in recovery, organisations need a resilient, fast-moving and skilled internal audit team asking the right questions and challenging them to focus on the future. In turn, these teams need information, guidance and training – and to share best practice and innovations as widely as possible.

The Chartered IIA is working hard to help its members share their experiences and to provide relevant, timely support for all facets of internal audit. We have recently updated our Financial Services Code and produced a new report on post-pandemic cyber risks, as well as training courses on ethics, effective remote internal auditing, staff welfare and wellbeing risk, and cybercrime and crisis management. More will follow. So join in, talk to others facing similar challenges and stay on top of best practice to ensure you survive the recovery as well as the crisis. 

This article was first published in March 2021.