Internal controls in a coronavirus world has never been more critical

This gives rise to an important question - have risk management and internal control systems developed at the same pace? Audit and Forensic Accounting experts from GMcG Chartered Accountants in Northern Ireland examine the key considerations.

The UK Corporate Governance Code places an obligation on directors to ‘carry out a robust assessment of the company’s emerging and principal risks’ and it is critical that company directors understand their duties in this area.

Has your business satisfied itself that risk management and internal control systems are sufficient to ensure you meet your obligations? A health check on your internal control environment has never been more critical than now.

Perhaps your risks and controls are well-documented, but unless they have been reviewed within the past few months, they are most likely outdated or incomplete. In the first instance, your existing control effectiveness must be reviewed. It is essential that this is done objectively and with particular focus on any control breaches or ‘near misses’.

It is then important to consider all changes to your business processes since those previously identified risks and controls were established. An updated risk assessment will take account of these factors and will often highlight a number of control gaps.

Added to this are the new and emerging risks that have arisen due to the pandemic. In many cases there will have been a large shift in business processes to operate in the ‘new normal’ whilst for others, changes may be more limited. Have staff been working from home? What impact does this have on segregation of duties? Are there adequate monitoring and review processes? Is cyber security compromised by current working practices? Do staff and customers feel safe in your business environment?

In addition, if the business’s control environment is reliant on the physical presence of employees or physical control systems at its usual business premises, the effectiveness of these controls is likely to be compromised by an increase in off-site working. It is crucial that control deficiencies or gaps in the control environment are identified and steps taken to address such deficiencies.

It is clear that the rapid change in business processes as a result of the coronavirus pandemic, as well as the challenges faced in responding quickly to new and emerging risks, has presented a real opportunity to those wishing to exploit any resulting deficiencies in your control environment. Reducing the time taken to identify any deficiencies in, and to implement any changes to, your control environment is key to reducing the opportunities that others have to exploit such weaknesses.

The dedicated team at GMcG Chartered Accountants can provide a robust, objective and cost-effective review of your control environment. Their leading edge expertise and combined skills in Audit and Forensic Investigations can identify areas that require urgent attention to reduce the risk of fraud, ensure compliance and, most importantly, safeguard the assets and earnings of the business.

Visit https://gmcgca.com/ for more information.

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