It is hard to believe COVID-19 has dominated our lives for more than a year now. Few could have imagined the depth to which it would influence our lives or change how we operate and interact in business and society in general.
One universal truth that has emerged about the pandemic is that the extent of its impact has varied. In some areas of the world, spread of the virus has been more dramatic, as have been the number of deaths. It is sobering to think that more than 2.6 million people worldwide have succumbed to COVID-19, including more than a half million in the U.S. Some industries have been devastated by lockdowns and curfews, including airlines, hotels, tourist attractions, and restaurants, while others have thrived, such as delivery services, online retailers, and meal kit providers.
The pandemic’s varied impacts are reflected as well in findings of the 2021 North American Pulse of Internal Audit, which will be released Tuesday at The IIA’s annual General Audit Management conference. The report’s title, The Many Sides of Crisis,describes the numerous ways the pandemic has affected internal audit budgets, staffing, risk assessments, and audit plans.
I’m happy to share with my readers a sneak peek at some of its key findings. One surprise was the muted effects the pandemic had on internal audit functions compared with organizations overall. This was particularly clear when Pulse data was broken down by industry:
Those are just a few examples that reflect the nuanced and complex effects of this world-altering event.
Pulse offers impressive insights into budget and staffing, also reflecting the pandemic’s uneven fallout. Internal audit budget reductions were extensive in some industries, particularly travel and professional development, while minimal in others. Some sectors actually saw increases in their internal audit budgets.
Interestingly, budget decreases reported for COVID-19 spiked to 36% of respondents, easily surpassing the 29% reported in 2009 amid the global financial crisis. In addition, fewer respondents reported budget increases in 2020 (20%) than in 2009 (27%).
Meanwhile, Pulse found that staff cuts were not as severe, which suggests internal audit leaders were keen on maintaining this vital resource by focusing cuts in other areas. Still, the percentage of functions reporting staff cuts doubled from 9% to 18% year-over-year. Overall, 64% of respondents said staffing remained unchanged. As noted earlier, cuts to smaller functions were more impactful.
In addition to examining the pandemic’s impact on the profession, this year’s Pulse offers readers five-year risk assessment trends tracked in 13 broad audit areas, with breakouts by organization type. This provides a wealth of data for audit leaders to compare and contrast their functions against those of their peers, and to educate their stakeholders.
As has been the case now for more than a decade, the 2021 Pulselives up to its name as a measure of the profession’s health. It is encouraging to me that internal audit fared as well as it did, considering the awesome and widespread disruption created by the pandemic.
Also, I am heartened that most organizations did not approach the crisis as an opportunity or excuse to disproportionately slash internal audit budgets. Indeed, there is strong evidence to suggest our stakeholders quickly turned to internal audit to ensure continued assurance over financial reporting and compliance issues.
There are many facets to COVID-19’s continuing influence on society, business, and our profession. The pandemic’s ultimate impacts on how and what risks evolve and emerge may not be clearly understood for years. However, this year’s Pulseoffers a valuable and timely snapshot of internal auditing at the end of 2020 and early 2021.
I encourage all my readers to download a copy beginning Tuesday.