VIRTUAL AUDITING- EMERGING TREND OF INFORMATION TECHNOLOGY IN AUDITING AND ASSURANCE

 We cannot deny the fact that the current COVID-19 pandemic has forced companies to change ways of doing their business. The companies are more concerned about their employee’s safety while upholding their social responsibility to the community and partners.

The virtual audit is becoming popular amongst organizations due to fast advances in information technology. Businesses already include high-tech strategies that permit the audit teams to receive and share data, conduct interviews, and also make observations with entities all over the world.

The latest version of ISO 19011:2018, regarding the guidelines for the auditing management system, consists of new specifications for the purpose of conducting virtual audits also known as remote audits to carry out this transition to e-auditing.

A significant number of drugs and device sponsors, manufacturers, marketing authorization holders had continued their operation and continue supplying essential products. Even existing companies and start-ups need to follow the compliances and complete their auditing work.

By taking Virtual Audit Services, companies can continue to qualify and prequalify their compliances by maintaining social distancing requirements that prevent them from conducting on-site audits.

 What are Virtual Audits?

Virtual audits are electronic audits, done paperless without any face to face interaction between the Government and Industry. All the data are exchanged in electronic formats such as MS Excel, MS Word, PDF Files, and EDI Files.

A virtual audit, also known as a remote audit, is also referred to as e-audit. It is entirely the same as an audit; the only difference is it uses electronic means to obtain audit evidence remotely.

The virtual audits techniques are akin to those used in person but, for example, you can share files by way of Google drive, email, and cloud sharing. Additionally, the organization can also provide documents by sharing its desktop screen, or through video conferencing on Zoom or Skype. Reviewing documents and records virtually can be more effective than doing on-site auditing.

Some of the areas that can create difficulty during a virtual audit involve manufacturing processes or product storage. In these circumstances, virtual audits can use live video surveillance to gather the required evidence.

Conducting of virtual audit does not mean that all the work must be performed off-site; some of the works are undertaken on-site too. E-auditing usually means that, if possible, the auditing activities will be arranged to be conducted away from the auditee’s location.

 What is the Process to Conduct Virtual Audit?

The process to conduct virtual audit are as follows:-

 1-Preparation for Virtual Audit:-

Preparation for a virtual audit is essential to get a successful outcome. The auditor must request for all the required information from the auditee that must be submitted before starting the virtual audit. These can include quality manuals, organisational charts, SOPs, etc.

The auditor must ensure that he meets the data privacy requirements (HIPAA, GDPR) in accordance with the audit process.

Collect a clear understanding of the auditee regarding how the records will be pulled and shared. It is clear that confidentiality and controlled distribution of documents is a primary concern for the audited firm. Hence file sharing with read-only access is essential. There are various solutions for this, such as Screen Share or file-sharing systems such as Box.com or Share point.

While sharing the document, the auditor must comply with the applicable global and local data privacy regulations. Suppose, some legislation prevents sharing the essential data outside the audited site, the scope of the audit will be adapted on a risk-based analysis. To enable compliant business continuity and also complimentary evaluations can be scheduled to finalize the quality assurance assessment.

Ensure that at least one or two auditee personnel are dedicated to supporting the audit over the designated period.

The auditee must make sure that the technology for the virtual audit is agreed upon and tested. WebEx and Face time both are examples of available technology for tours and other options for video conferencing.

Check that the web meeting invitations are sent with ample time in hand for each party to plan conferencing and conference room space. Both parties must confirm that the appropriate personnel are available and scheduled for the audit.

The auditor should request a virtual tour to be set up for a facility tour or detailed facility presentation by the auditee. The Audit Plans and Agendas can be prepared as usual.

The time generally scheduled for doing a facility tour should be used to view an online virtual tour or presentation provided by the auditee in cases where a facility tour is mandatory.

A risk-based assessment must also be applied to explain the purpose of this facility tour and also discuss the essential areas to be covered if a complete tour is not possible.

2-Performing the Audit:-

The auditor must conduct the audit as carefully as possible to the onsite audit. The audits to be performed can be divided into two sections with significant intervals having enough duration for the auditee to collect and upload the documents that are requested during the audit in the shared drive.

Both parties must hold open meetings with then appropriate personnel suing the agreed video conferencing tool.

The auditor must request a virtual tour of the facility, or the auditee can present a facility overview presentation to be provided with facilities plant, pictures and process flow. An open meeting must follow these.

In case if any documents and records are provided way ahead of time by way of email or through website service, then the auditor can proceed with the document review work.

Any types of questions and requests can be provided via chat, phone, email, or online web conferencing.

If the auditee fails to provide the documents for auditors’ review, then the documents and records will be shown via utilizing the video conferencing tool.

 3-Conduct a Closing meeting:-

The closing meeting must be held as usual but by way of the tool selected for video conferencing.

The auditor must make sure that this meeting has been planned and scheduled ahead of time with the proper invitees.

Conducting an on-site audit has its advantages and also permits the auditor to investigate the process in real-time, even perform a physical tour of the facility.

However, the current ongoing COVID-19 crisis has forced the organizations to adapt and utilize other solutions. A virtual audit can be said to be the best solution for allowing the business.

 What are the Benefits of Virtual Audit?

There are several reasons why virtual Audits are beneficial for your business. Some of them are:-

 Time and Cost-Efficient:- Many of the data is accessible from anywhere, such as Cloud Portal. So it is better to save time to travel check documentation that can be available by other means. Hence there will be a significant reduction in money and the time spent on commuting to the audit location. Besides, the interviews, as well as the observations, can be performed by way of popular platforms such as Skype and Zoom, which are used by companies regularly.

 Avoids Travelling to Different Locations:-

Some locations for conducting an audit can be challenging to access for various reasons:-

1-The location is possibly in an isolated area.

2- The auditor needs permission to get in- sometimes visas are required if the audits are conducted internationally.

3- With Virtual audit, you can avoid these difficulties.

4- No Need for Audit Logistics:- While conducting a virtual audit, usually the organizations are relieved from the logistics related to booking of conference rooms and cleaning after the auditing team leaves, as well as worrying about the audit team and the employees’ health with regard to the ongoing pandemic. The auditors will also be saved from other inconveniences experienced during an onsite audit.

5-More Efficient Team:- The audit team will feel more comfortable in working from their home office environment. Since, they will be able to use all the necessary tools such as monitors, printers, high-speed internet, etc. Hence in this way, the productivity will increase substantially in an e-audit in comparison to an on-site audit, needing less time to complete the given task.

 What are the Hurdles in Conducting Virtual Audits?

The following hurdles are faced by an organization while conducting a virtual audit:-

Virtual audits are not approved by some certification and accreditation bodies.

Some accreditation and certification bodies still consider e-audits not to be valid. They only approve traditional audits carried out on-site even though specifications for e-auditing are included in ISO 19011: 2018.

The primary reason is that some accreditation and certification bodies still have not decided regarding how much time is required to collect reliable audit evidence and also trust the audit results.

For example, the auditor’s apparent concern is performing an audit without visiting the location. Also, it has specific doubts about the reduction of on-site hours that can be spent on virtual work.

On the other hand, the auditors hired to conduct virtual audits should have the necessary technical knowledge for delivering this kind of audits. These means that an extra effort for the certification and accreditation bodies is needed to train auditors on these techniques.

Issues with technology:- Organizations can face challenges with logistics. Sometimes the network connections are not reliable, or the auditee can have difficulties with accessing the CVPN to log into the database to show evidence. Further, due to network issues, the interviews and meetings can get interrupted.

Lack of involvement:- Other issues that are related while performing remote audits /virtual audits include the process owners who become unavailable due to some scheduled meeting, or even lack of attention from the auditees. Auditee companies can perform a significant role here. They can deliver the awareness sessions for their employees and also preparing the employees with all the necessary tools for e-audit.

Trusting the audit:- Some of the auditors want to perform on-site audits because as per their assumption, they can trust the audit only if they get physical access to audit evidence.

For instance, virtual audits can be seen by auditors as not suitable for the purpose of auditing, since visiting a site can provide vital information for identifying the issues of the company.

Insufficient auditor training and experience:- The lack of training or experience of the auditor performing audits can lead to an inability to collect sufficient audit evidence. The virtual team must have the necessary knowledge to conduct audits using technology appropriately.

 Why are Virtual Audits considered as the Future of Auditing?

Virtual Audits have come to remain in the market. Their preferences are irrefutable over the conventional techniques, even though there are still a few boundaries to survive. Traditional audits, in any event, when they have been all around arranged and executed, may cause a specific measure of bother and disturbances to the association being inspected. Moreover, business managers are progressively finding these e-audits alluring, since decreases in expenses and assets are verifiable utilizing virtual approaches.

Likewise, virtual audits are an option for a progressively effective and profitable technique for examining, not just from the perspective of the inspected organization, however, to the auditors too.

What are the issues that need to be checked before performing virtual audits?

The following issues need to be checked before performing virtual audits:-

• Identifying the time period for retaining the records.
• Look for ways to back up the files.
• Prepare similar rules for naming and also categorizing the files.
• Have proper knowledge of the electronic recordkeeping requirements and professional standards of the IRS.
• Prepare security systems to ensure the authenticity, and also prevent manipulation of data.
• Have proper access to confidential information.
• Get commitment from the management and resources for automation.

 Frequently Asked Questions:-

 1-What is the procedure to conduct a virtual audit?

The Procedure to conduct a virtual audit are as follows:-

• Hold opening meetings with the auditee using the video conferencing tool agreed by both the parties.
• Request a virtual tour of the facility or that a facility overview presentation must be provided with pictures, facilities plant and process flow (if applicable),
• Follow-up again with a meeting.

 2-What is virtual auditing?

Virtual auditing is one of the audit methods described in ISO 19011:2018. These allow the auditor to communicate with people globally, accessing a wide range of information and data. These techniques transform the way we work.

 3-What is an ISO 9001 audit?

An ISO 9001 audit is a systematic, independent, objective and documented process for gathering facts. These help you to identify areas for improvement and ensure you have best practice processes in place. Driving continual improvement is a crucial part of ISO 9001.

 4-What are the four types of audit reports?

There are four types of audit reports:

• Unqualified Opinion
• Qualified Opinion
• Adverse Opinion
• Disclaimer of Opinion

  5-What do auditors look for in an audit?

An audit examines all your business’s financial records to verify that they are accurate. This is done by way of a systematic review of your transactions. Audits verify your financial statements and accounting books for small business. Auditors write audit reports to detail what they found during the process.

6-Do auditors check every transaction?

It is not possible for auditor’s to check every transaction, but he or she will conduct more extensive testing in areas that presents a higher risk of material misstatement. The auditor does not express an opinion on the effectiveness of the company’s internal controls.

7-How will the virtual audit planning process be different?

Devoting extra time behind the scenes to develop the audit plan that is based on the information we gather from you during planning conversations. The main area that is expected on your audit relates to the evaluation of the internal controls. We will plan video conferencing. Screen sharing or use any other methods for the purpose of virtual audit.

  8-What if my audit started before COVID-19, but it is not yet completed?

Your auditing team is working behind the scenes to wrap up your audit and will be communicating with you as work progresses. Expect some additional questions related to how we will evaluate whether there have been significant impacts like the disclosure of another subsequent event to the footnotes of your financial statements.

 9-Is there a need to upgrade your computer for conducting the virtual audit?

No, there is no need to upgrade your computer for conducting the virtual audit. The technology requirements are pretty minimal – just some webcams and collaborative software such as Skype, Zoom, Face Time, or WebEx will enable us to continue having face-to-face conversations and even the ability to screen share as if we were there with you in person. You just need to have a proper internet connection along with a desktop or laptop.