Navigating the New Normal: How COVID-19 Transformed Audit Routines

 Sung Hwan Chai, Brian Nicholson and George Salijeni (2021) Understanding the Effect of COVID-19 on Audit Routines, British Academy of Management conference

The global upheaval caused by the COVID-19 pandemic has left no industry untouched, and the world of auditing is no exception. The sudden shift to remote work, coupled with stringent social distancing measures, posed unprecedented challenges for auditors. Traditionally reliant on in-person interactions and on-site examinations, audit firms had to quickly adapt to maintain the integrity and quality of their work.

This blog post delves into how the audit routines underwent a transformation in response to the pandemic, focusing on the innovative solutions auditors employed and the implications for the future of the profession.

The Challenge at Hand

When the world came to a standstill, the audit industry was faced with a dilemma: how to continue essential audit activities while ensuring the safety of auditors and complying with government-imposed restrictions. The core of auditing, from inventory counts to client interactions, was suddenly disrupted. Auditors had to rethink their approach to tasks that were traditionally performed in person, such as verifying physical assets and collaborating with team members.

Innovations in Audit Routines

Adaptation became the key to survival. Audit firms, particularly in the UK, where our case studies are based, showed remarkable agility in reshaping their audit routines. Two significant changes stood out:

Virtual Audit Rooms: The essence of teamwork in auditing often lies in the bustling audit rooms where juniors and seniors collaborate seamlessly. The pandemic threatened this dynamic. In response, auditors created "virtual audit rooms." Through platforms like Zoom and Teams, audit teams would remain in a call throughout the workday, simulating the physical presence and accessibility of a traditional audit room. While the camera and microphone were off by default, team members could activate them when needed, preserving the opportunity for real-time consultation and mentorship.

Remote Inventory Counts: Physical inventory verification is a cornerstone of auditing. With site visits off the table, auditors turned to technology for solutions. "Remote inventory counts" became a norm, where auditors used video conferencing tools to guide warehouse staff through the inventory count process. This method, albeit more cumbersome and costly, ensured that audits could still provide the necessary assurance on physical inventories without compromising auditor safety.

The Road Ahead

While these adaptations were crucial in navigating the immediate challenges posed by the pandemic, they also sparked a conversation about the future of auditing. The reliance on technology not only maintained audit quality but also introduced efficiencies that could shape post-pandemic audit practices. However, the research suggests a strong inclination among auditors to return to pre-pandemic routines once safe to do so. This raises questions about the long-term impact of these changes. Will the innovations become a staple in the audit toolkit, or will the profession revert to its traditional ways?

In conclusion, the COVID-19 pandemic has been a catalyst for change across industries, and auditing is no exception. The profession's response highlighted its resilience and ability to innovate under pressure.

It is interesting to follow up on which changes became embedded in audit practices and which are left behind. One thing is clear: the pandemic has shown that the audit profession can adapt and evolve, even in the face of unprecedented challenges.