IIA, IFAC urge audit committees to address coronavirus risks

The Institute of Internal Auditors and the International Federation of Accountants are calling on audit committees to be vigilant about risk management, performance, controls and processes during the COVID-19 pandemic.

The leaders of the IIA and IFAC issued a call to action Wednesday for audit committee members in response to the pandemic. They also offered some recommendations to help organizations confront the uncertainties and turmoil from the novel coronavirus pandemic, which threaten their integrity, transparency and accountability.

“We must be aggressive and future-oriented in prioritizing and managing new threats and vulnerabilities, while not being distracted from existing risks,” said IIA president and CEO Richard F. Chambers in a statement. “Governing bodies and their audit committees, in particular, must be highly vigilant, nimble and well engaged to ensure they, as well as management and others, are receiving objective assurance and insight on critical aspects of organizational activity.”

The IIA and IFAC suggested governing bodies and audit committees stay informed by maintaining a timely, clear understanding of the ever-evolving operating environment and how it may affect organizational objectives and performance. Audit committees should take a multidisciplinary approach to their oversight of internal and external audit and reporting through communication and collaboration. They should also leverage the available expertise by looking for qualified, reliable assurance and advice on management evaluations of, and responses to, the organization’s evolving risks and risk profile.

Audit committees also need to promote continuous improvement. They should encourage innovation and change to address their organization's vulnerabilities to build greater resilience and pursue value creation. IFAC and the IIA also recommended taking a holistic approach by adopting a broad perspective of the organization and its environment across both financial and nonfinancial goals. Audit committees should consider their interconnections with other organizations, internal and external interdependencies, and the central importance of people. IFAC and the IIA also recommended optimizing the performance of the audit committee through the use of technology and flexible working practices.

“The impacts of COVID-19 on the global economy will be felt for years, if not decades,” said IFAC CEO Kevin Dancey in a statement. “This creates long-term risks and uncertainties that organizations need to confront head-on through strong governance and internal controls. We hope these recommendations will support governing bodies and audit committees as they navigate the continuously evolving operating environment of today and tomorrow.”