ViewPoint Espresso How are companies tackling enterprise risks? # 4, January 2021 – Remote Audit
Espresso surveys - Enterprise Risk Management Pulse Check, 2020-2021 The Espresso Survey is turning its focus to Enterprise Risk Management. What are companies struggling with these days and has the picture changed due to the “new normal”? Throughout this series of surveys, we check the pulse of companies on the following topics: Environmental Management (June 2020) Business Continuity (September 2020) Infection Risk Management (November 2020) Remote Audit (January 2021) Occupational Health and Safety (March 2021)
Information Security (planned 2021) The topics selected are both new and returning ViewPoint survey topics. Where possible, we compare data to see what changes may have occurred over time. The objective is to provide insight on each topic as to what is top of mind for companies around the world when it comes to Enterprise Risk Management. 2
Setting the Scene
Topic in focus
How do you know…?
What did we ask?
What did we find?
The fourth snapshot is of remote audits. The short survey was launched in January and results released in March 2021.
…if remote audits work for your company? You try it on for size. When faced with maintaining certification(s) during the prolonged pandemic, companies had to adopt remote or blended (combining remote and onsite) audits. While remote audits were not new, an unequalled high number had to convert and schemes, rules and methodologies adapted. But what have we learned from this somewhat forced giant experiment?
• Have companies taken part in a remote audit and if so, how satisfied were they with the experience?
• There has been a drastic increase in remote audits during the pandemic.
• How did the remote experience compare to an onsite (face-to-face) audit?
• While satisfaction is high, some respondent do experience significant barriers preventing remote audits from running smoothly.
• What were the main benefits? • What were the main barriers? • How do companies see remote audits being applied and evolving in the next 2-3 years?
• The ability to maintain certification is the primary benefit of remote audits. • The remote audit approach is here to stay and respondents are optimistic that existing barriers will be eliminated.
Question 1 – Participation and satisfaction Have you been part of a remote audit in the last year? All in all, how satisfied are you with the remote audit experience? • Over the past year as many as 65% have taken part in a remote audit. This underscores COVID-19 pandemic’s impact and need for agile adjustments to mitigate impact on companies’ certifications.
100% 64,6% 50%
• The overall satisfaction is good with 83% saying they were either ”Very satisfied” or ”Satisfied”. This is considering all respondents across specific standards, company size, sectors or geography.
• It is likely that many respondents have experienced a blended approach of remote and onsite audits. The audit approach is decided based on established rules complying with scheme owner and accreditation body requirements.
82,9% 60% 40%
0% Very satisfied
Question 2 – Remote audit evaluation Which of the following statements do you agree with the most? We have experienced a remote audit and … • About 60% reported that ”It was mainly beneficial”. One could have expected this number to be even higher given the high satisfaction rate reported (Question 1).
• More than 20% still prefer a traditional approach, indicating that ”I prefer face-to-face audits”.
• Almost 18% experienced some barriers and reported “It was mainly challenging”.
• There are geographical differences. North American companies are particularly positive with 73% saying “It was mainly beneficial”. Central and South America comes in at the opposite end of the spectrum. A total of 48% reported that it was mainly challenging. Both cultural aspects and severity of COVID-19 restrictions may be influencing these geographical differences.
50% 40% 41,3% 30%
• Companies with office-based activities (e.g. financial / IT services) are more positive than the average, which is due to the nature of their work and naturally fits with remote audits.
10% 1,1% 0% It was mainly beneficial
It was mainly challenging
I prefer face-to-face audits
Question 3 – Potential benefits How relevant for you were these potential remote audit benefits?
• The COVID-19 lockdown forced companies worldwide to apply remote audits to maintain their certification. This has given a unique insight into its application and perceived benefits.
30% 20% 10% 0% Keep certificate Efficient time Reduced travel Strict respect of Possibility to and conduct use for audited time and costs audit plan efficiently audit despite personnel from auditors time/schedule follow/witness pandemic audit remotely
Reduced Reduced travel environmental risks for internal footprint personnel
Highly relevant Highly + somewhat relevant
• Maintaining their certification and conducting audits despite the pandemic is the primary driver for 85%. This number rises to 97% when combining those responding “Highly relevant” and “Somewhat relevant”. Percentages are equally high across all geographies. This is not surprising given that maintaining once’s certification is a ticket-to-trade for many and an integral part of managing operational risks. • While other benefits score lower overall, perception varies across the geographies surveyed. South Central America score high on all benefits, the lowest being 88% for the possibility to follow or witness the audit remotely. This is interesting given close to half of the respondents found the remote audit format challenging. Asia rate the various benefits high, as well. The lowest score is 71% for reduced environmental footprint.
Question 4 – Potential barriers From your experience with the remote audit, how much do you agree with the following statements:
• 100% 90% 80% 70%
60% 50% 34,6%
0% Effectiveness of the Preparation of the audit I experienced audit I perceived possible I found the remote audit was lower plan was more disruptions due to poor threats to information effectiveness of IT compared to a cumbersome and time- Internet connection security technologies used for traditional audits consuming remote audit to be low
Completely agree Completely + somewhat agree
Of those who had experienced a remote audit, 35% reported the effectiveness to be lower compared to traditional audits. In Asia, 45% found remote audits inferior to the traditional approach, while in North America only 29% indicated the same. Again, geographical differences could be influenced by cultural factors as well as length or degree of COVID-19 lockdown.
• ICT barriers, like Internet connection, information security and technology, are a concern and potential barriers for effective application of remote audits. This is reported as a particular issue in Asia, where 49% reported Internet issues and 45% information security threats. In Central South America, 47% reported Internet connection issues. • Fewer obstacles were reported for office-based companies, which is quite natural as the nature of their business may mean they are better equipped to adopt remote audits at the outset.
Question 5 – Future of remote audit Please use the scale to indicate to what extent you agree or disagree with each statement:
• Despite the barriers perceived by some during what may have been their first remote audit experience, most companies predict that this approach is here to stay. In the next 2-3 years, 76% “Completely agree” or “Somewhat agree” that pure remote or blended (mix of remote and onsite) audits will become the norm.
I think that in the next 2-3 years remote/blended audits will 1 become the norm for companies like mine
• Moreover, 77% believe that remote or blended audits will improve and be as effective as traditional onsite audits in the next 2-3 years. This seems to support the notion that while barriers are encountered today, expectation is that it is possible to find or develop solutions.
I think that in the next 2-3 years remote/blended audits will improve and will be as effective2 as traditional on-site audits
Completely agree Completely + somewhat agree
Conclusion Remote or blended certification audits definitely have a future in assurance. After having tried it on for size most companies predict such approaches an integral component moving forward. When COVID-19 hit companies and supply chains globally, they were forced to quickly find ways to keep people safe and wheels turning. Risk management and business resilience rose to the top of corporate agendas while continued maintenance of certifications and qualifications became challenging. With lengthy lockdowns preventing traditional onsite audits, it forced a global remote audit experiment. Not that the format was completely new, but the number of companies suddenly engaging in remote audits was unprecedented. A year later, over 63% of the respondents in our survey have experienced a remote audit. The primary driver is to maintain their certification. Overall satisfaction with remote audits is high (83%), but significant barriers exist. Especially ICT constraints, like Internet connection and information security, are viewed as hampering the experience.
When compared with traditional onsite audits, a total of 35% report the effectiveness to be somewhat lower than that of onsite audits. However, there is one clear prediction: remote and blended (mix of remote and onsite) audits are here to stay. A total of 76% say this will be the future norm and 77% believe them to be as effective as traditional onsite audits in 2-3 years. Work to assure quality and effectiveness and remove ICT barriers is essential to progress. Moreover, the audit approach applied must be the one most suitable for the context, applied in accordance with customer preferences and certification requirements. Thus, the conclusion from the global experiment seems to be that a perfectly blended audit approach is a central part of the future of assurance.
Methodology and Sample
This Espresso survey was conducted in January 2021.
It involved 3,475 professionals in companies across different industries in Europe, North America, Central & South America, and Asia.
• The sample consists of Business Assurance customers in DNV and does not claim to be statistically representative of companies worldwide. • The questionnaire was administered using the CAWI (Computer Assisted Web Interviewing) methodology.
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ViewPoint Espresso report on Remote Audit