By now, we are well aware of the detrimental impact that COVID-19 has had on our business models and profitability. To preserve and protect their bottom-lines, organizations across the world have looked to cut costs and slash overhead. As a result, internal audit departments have been placed firmly in the crosshairs. While some companies view this reduction in audit staff as a fiscally prudent business decision, many auditing professionals claim that this is a decision with potentially catastrophic implications.
According to business experts, now is the time for employers—especially those with large government contracts in highly-regulated industries—to invest in their audit departments. Due to the significant percentage of the workforce that has transitioned to long-term virtual work arrangements, organizations must be diligent in proactively protecting against internal employee fraud.
Here are some of the most pressing operational and remote workforce risks that companies need to be aware of:
Siloed and outdated systems
Managing a robust business strategy can prove difficult if organizations have an archaic operational structure and systems in place. From in-house communications to customer service, all aspects of your business can be severely impacted by how you choose to organize them. If your internal systems fail to properly communicate or share information with each other, this presents a risk for your business.
As the pandemic accelerated the shift to remote work, many departmental platforms and programs were created outside of the company’s standard procurement and quality standards vetting process. This enabled “bad actors” to target these companies by discovering easy loopholes that can cause harm via technology breaches. To inhibit the progress of these cybercriminals, organizations need to ensure that their systems are up-to-date and secure enough to effectively fend off potential attacks.
Hard work going unnoticed
Many employees have been forced to take on an added workload to atone for internal furloughs and layoffs. This increase in responsibilities without a raise in pay can often lead to worker dissatisfaction, resentment, and even entitlement. During the holiday season, it is not uncommon for employees to use their company credit cards to fund personal expenses as a way of justifying this lost compensation. Today, there is an even greater risk of non-business-related charges from employees who were forced to accept salary reductions during the pandemic.
The presence of a powerful auditing department can detect these excess charges to ensure that they do not hinder your organization’s bottom-line. Enacting stringent expense report protocols can prove to be a cost-effective measure that will challenge faulty receipts or suspicious spending patterns.
Fraud on a foreign scale
During the pandemic, the United States has not been the only nation to experience an increase in cyberactivity. As China, India, and third-world countries have observed a massive rise in fraud attempts, organizations have been forced to explore ways to make their security measures more effective on a global scale.
Companies should first begin with audits in compliance, anti-bribery, and fraud before diving into more detailed strategies. Organizations have found success when conducting confidential fraud surveys that help identify whistleblowers with information on dishonest practices by a coworker or manager. Businesses should also continue to monitor for potential spam emails and phishing attempts that can be used to lure employees to commit fraud in exchange for a significant payback.
While some organizations have observed greater business productivity during the shift to remote work, others have been hindered by low-performing employees. In a virtual setting, it can be much easier for some workers to hide their lack of productivity from their managers.
Organizations need to educate their management teams on the importance of remaining active and engaged with their employees. Whether managers are implementing 360-degree feedback, conducting pulse surveys, or holding periodic, cross-functional discussions, these tools can prove effective in sorting out the “good” employees from the “bad.”
The outbreak of the COVID-19 pandemic has accentuated the need for organizations to protect themselves from potential fraudulent activity—both internally and externally. If companies choose not to take a proactive approach, they run the risk of succumbing to harmful fraud attempts and other forms of criminal cyber activity. As businesses look ahead to 2021, it will be critical that businesses augment and retain their staff of auditing professionals and boost their auditing budgets to support more comprehensive audit strategies in the new year.
For more organizational tips from our TalentRise team, check out other posts on our company blog.