Internal Auditor’s Navigation COVID-19- “Here Be Dragon”
By Alia Noor, Associate Partner at Ahmad Alagbari Chartered Accountants, UAE
According to ancient myth,
“Here Be Dragons” was a phrase frequently used in the 1700s and earlier by cartographers (map makers) to mark on maps identifying uncharted waters. It was meant to warn mariners from dangerous areas where sea monsters/ dragons were believed to exist and to take caution.“.
Companies are dealing with adverse consequences of COVID-19 such as, liquidity crunch, resource constraints, under-utilized assets, legal and contractual non-compliances, and in certain cases going concerns, which demand rapid responses in an environment that changes by the hour.
In these times Internal Audit have both an obligation & an opportunity to help their companies manage the most critical risks COVID-19 has either created or magnified.
By assisting management in “weighing risk and opportunities to take inform decisions” based on and backed up by evidence to convince top management to act.
While exploring “Here be dragon” areas to know where dragons Lurk (hide), Internal Audit must Play both “Advisor & Assurer” Role, in dealing with them.
Some of Roles are mentioned below and may vary according to industry,
- Explore & understand “COVID-19’s impact on their Industry & Business“
- Navigate & connect with key departments to “Assess Existing & Emerging COVID19 related risks”.
- Evaluate the emerging Risks of “Newer operating models and business practices” and redirect your attention to the most time-sensitive risks.
- Monitor increased “Cybersecurity Threats” due to increased VPN or mobile device usage as more employees work remotely.
- Look for “New third-party risks” due to “Operations & supply chains” disruption.
- “Finance and liquidity challenges” may arise from revenue shortfalls, debt servicing requirements, covenant breaches and rising customer credit risk.
- Challenge management’s forecasts that directly impact financial reporting, e.g. going concern, pension scheme accounting, goodwill and intangibles, Expected Credit Losses.
- Challenge management’s assessment, monitoring and contingency plans of key outsource service providers.
“Internal Audit must look through Risk lens, beyond annual routine and step up to help & guide organization through the pandemic. – By Predicting the unpredictable and dealing with risk and uncertainty”