Virtual Audit Services

Ever since COVID took over our lives, We have Succumbed to the Marvels of the Internet and technology as a whole. Education, employment, trade, everything took a virtual turn.

Prior to 2020, we could not wrap our heads around the concept of "Online Education", "online seminars", "virtual training", or "virtual audits". But now we can.

We know what virtual audits are and how they can be conducted without any further difficulties. For those who don't, continue reading to know more.

What is an Audit?

We have often looked up “audit meaning” on the Internet. Here, let’s try and break it down for our ease.

An audit is essentially an inspection conducted by an independent entity or auditor into the finances or accounts of any business, firm, or organization.

Audits are essential for maintaining the credibility of a business, making improvements in its business structure, preventing fraud, and the like.

What is a virtual audit?

Having laid down the base of the meaning of ‘audit’, let us now move on to a virtual audit.

As the name suggests, virtual audits are generic audits just conducted on a virtual medium.

In the past 2 years, since the onset of the pandemic, virtual audits have been gaining importance substantially.

Virtual audits are conducted by virtual auditors, also known as remote audits.

They are carried out electronically, making use of digital media for the purpose of data transmission and conducting meetings.

Virtual audits help eliminate the risk of transmission of diseases caused by one-on-one interactions between an organization and the auditor(s).

How are virtual audits conducted?

To a certain extent, the processes of virtual audits and regular audits do not vary much, except for the medium they are conducted on.

The following points are to be kept in mind whenever you act as a virtual auditor:

1. Preparation

As part of preparing for virtual audits, or audits, as a whole, an organization is required to submit all necessary files and data to the auditor beforehand.

This is done so that the latter has adequate time to examine, evaluate, and assess the financial state of the business before they conduct the actual audit.

On the part of the virtual auditor, they must ensure that they meet data privacy requirements. Additionally, the following guidelines must necessarily be adhered to:

1. Before conducting the audit, the auditor and auditee must have had clear communication about how the financial records are to be shared and surveyed

2. The virtual auditor must maintain the confidentiality of the firm's records. To comply with this, the auditee should share files with read-only access.

3. To ensure the smooth conduct of the audit, 1 or more than 1 personnel from the firm undergoing an audit must be employed to assist the auditor.

4. As the audit will be conducted in the virtual model, the business must ensure that the respective technology for the same has been agreed upon and subsequently tested.

5. An audit involves the survey of financial records and meetings and conferences held by the auditor. For this, the auditee must circulate the meeting invitations for the same well in advance.

6. Both the auditor and auditee are required to authorize that their respective personnel are available and ready for the scheduled audit.

7. The auditor may or may not ask for a virtual tour or staff tour of that of the auditee.

8. The agenda of the audit should be prepared beforehand.

2. Performance

After the audit has been prepared, the auditee and virtual auditor both are required to ensure smooth performance of the audit. For this, the following steps stand as a prerequisite:

1. There must be no bias or difference between a physical and virtual auditor on the part of the auditor. No discrepancy shall be entertained.

2. The audits may or may not be divided into 2 or more sections, as per need, with substantial intervals required by the auditor.

3. The aforementioned interval must be provided to the virtual auditor so that they get enough or adequate time to gather, review, and upload the necessary documents that the auditee has shared.

4. Open meetings shall be conducted with the respective personnel. These meetings should be performed using the conferencing technology that had been previously agreed upon by both parties.

5. These open meetings shall be preceded by a previously mentioned virtual tour by the auditee.

6. If in case, the related documents have been provided to the auditor by the firm undergoing an audit in advance, the auditor may proceed with the review of the same if they so, please.

7. If the firm fails to provide these documents beforehand, the same shall be presented for the subsequent review through the conferencing tools and technology.

8. Any further questions, queries, and requests shall only be entertained through text, calls, emails, or virtual meetings.

3. Conduction

This stands as the last and most important stage of a virtual audit.

The "conduction" stage usually refers to the conduction of a closing meeting since the performance of the virtual audit has been covered in the previous stage.

1. The closing meeting must not be held using the same conferencing tool as was used for the virtual audit.

2. The virtual auditor is required to ensure that the scheduling of the closing meeting has been done well in advance and is duly conducted.

As a closing meeting is the last stage of an audit, it stands as the most important one, as it is the final impression your firm leaves upon the auditor.

Benefits of Virtual Audit

As we know by now, audits are essential to analyze the financial standing of a business entity.

But, is that all? Please continue reading to know more about the advantages of an annual audit and why it is essential for your business.

1. Strengthening and introduction of Policies

As a virtual auditor would look into your firm’s financial records and could interact with your staff if they wish to, the anticipation of an audit creates a need for updating and strengthening your respective policies.

Your firm's policies and mechanisms must be in place to protect the interests of and satisfy your staff.

When reviewed by the virtual auditor, this informs the firm of how well they have fared in terms of the rest of the market and individual effectiveness.

Auditing also helps in the recognition of changing trends and in identifying the errors, if any, present in the current company framework.

2. Prevention of fraud

Regular annual audits have, by far, been the best method to curb the chances of fraud and misconduct in an organization.

Audits are conducted to assess and monitor the auditee's financial status or condition.

In doing so, financial threats, fraudulent activities, and other forms of misconduct can easily be identified.

Apart from the firm as a whole, an audit may also be conducted on an individual level.

Virtual auditors, in doing so, may be able to identify wrongful acts in the following areas: management, inventory, sales, accounting, and the like.

3. Improves the business structure

As audits are conducted to assess the state of a business entity with a holistic approach, the involvement, review, and feedback of a virtual auditor help firms in making appropriate changes to their business.

The auditor may be able to detect opportunities for expansion, wrongful behaviour, or scope for improvement in the current business framework.

4. Maintains credibility of the firm

When a firm hands over its books of accounts to a virtual auditor, it discloses all relevant financial data of the firm to the latter.

The auditor further ensures the firm is not running in losses and can continue its business without any additional hindrance.

Undergoing an audit also relieves a firm of chances of fraudulent activities going on within its four walls, as an auditor is present to take a close look into all the activities of the firm.

Thus, an audit would increase the credibility of a firm in the market, as its name would be clear of any stain with respect to losses, fraud, or non-disclosure.

5. Planning and future budgeting

As an audit reveals a firm’s financial status to the auditor, the same could facilitate further planning and budgeting for the firm’s future. The auditor’s inputs, in this regard, are extremely crucial.

As mentioned above, the benefits extend to virtual and physical audits. However, the following advantages are specific to virtual audits only.

6. Time and cost saving

Since necessary data, information, and documents are shared virtually, not much time, effort, and monetary resources would be required on both the parties' part for the smooth conduct of the audit.

Time would be saved by online uploading documents, which would be available for the virtual auditor's use as and when necessary.

As the medium of the audit is virtual, no additional or extraordinary expenses would be required to be incurred on either the auditor's or the auditee's part.

7.No need for logistics

Here, we are talking about a virtual audit. As the name suggests, the audit would be conducted over the Internet.

Therefore, the auditor would not be required to travel to locations, which could otherwise prove to be a cumbersome task.

Furthermore, as the subsequent meetings would be held online, the auditee would not have to engage in time-consuming logistics with respect to the upkeep of the conferencing room before and after the audit.

What could be some drawbacks of conducting virtual audits?

Every coin has two sides. Nothing in the world is free of any disadvantage to its credit.

Likewise, even with all their advantages, virtual audits have some drawbacks too. These demerits can be seen as follows:

1. Technological limitations

Technology is a very vulnerable and uncertain element of life. It is prone to disturbances.

While conducting an audit, there may be technical hindrances in the form of access to technology or the Internet. Network issues could disrupt the auditing process.

2. The credibility of the audit

As it is very easy to photoshop documents or provide false information on a virtual medium, the credibility of an audit by a virtual auditor is susceptible to doubts.

How do we ensure a successful virtual audit?

The following tips must be kept in mind when conducting a virtual auditor to ensure the smooth conduct of the same.

1. Planning out the details

As earlier mentioned, all relevant details of a virtual audit must be planned, decided, and agreed upon well in advance.

Any changes in the same must be communicated to both the virtual auditor as well as the auditee.

These details shall be planned out in terms of the technology that is to be used, how the files are to be shared, and how and when the audit is to be conducted.

2. Maintaining the security of files.

It is very important for both the auditor and auditee to pay utmost importance to the security and confidentiality of the files shared during an audit.

As the files show important financial data of the firm, they are most prone to threat and are thereby the most important asset that the firm has.

3. Show involvement

Audits are not meant to be rough and tough and formal only. The auditee must show as much involvement as possible to give a lasting and good impression to the auditor.

Employees must show their faces or keep their videos on during such audit meetings to accomplish the same. Employees must seem enthusiastic, satisfied with the firm, and happy to work there.

4. Why are virtual audits the new reality?

With the onset of the pandemic, everything took a virtual turn. Education, jobs, audits, training – everything has found a way to be conducted virtually now.

Keeping in mind the multiple advantages that virtual audits provide, especially since it is time-saving and economic-friendly, virtual audits might as well be the way to go from here.

More and more companies are adopting virtual audits every day now. And by the looks of it, this rate is only going to increase. Thus, we can do nothing but accept virtual audits as the new reality at this point.