Hybrid work makes fraud detection more difficult, auditors warn
Hybrid work creates a “cultural crisis” for companies by eroding staff loyalty and making it harder to retain talented employees as well as detect fraud, auditors warned.
Nearly half of senior auditors believe the shift to remote work during the pandemic has damaged organizational culture, according to a new study from the Chartered Institute of Internal Auditors.
The survey of more than 700 senior auditors across the UK and Europe “highlights a growing crisis in post-pandemic organizational culture, which has the potential to trigger a chain of negative impacts through broader business structures, ”said the CIIA.
Heli Mooney, Head of Internal Audit at Ryanair, said: “Most companies are focused on ironing out the issues with the hybrid work model from a technical and practical perspective. What isn’t dissected enough is how new working models can potentially erode organizational culture.
“The dilution of a strong organizational culture can trigger a myriad of. . . risks, especially on talent management and fraud, ”she added.
Many companies – including tech groups Google and Microsoft, accountants EY, KPMG and PwC, and law firms Clifford Chance and Freshfields – have already committed to making working from home a permanent part of their business model.
But John Wood, chief executive of the CIIA, warned that “the risk of a cultural crisis must be taken into account by all companies pursuing a hybrid business model”.
“It has never been more urgent for companies to develop strong systems to both identify and mitigate risks to organizational culture, before it becomes a crisis,” he added.
Business continuity, crisis management and disaster response were the risk category most accentuated by the pandemic and seen as a major area of concern by two-thirds of respondents, according to the CIIA survey. Cybersecurity and data security came second, followed by health, safety and security.
The erosion of organizational culture has become a matter of concern, ranking fourth from 11th place a year earlier, and is now above concerns such as financial, liquidity and insolvency risks, and digital disturbances.
Reduced face-to-face interaction between colleagues in a hybrid environment would reduce previous processes of building culture and team cohesion, said the CIIA, a trade association representing 10,000 internal auditors across sectors in the UK and UK. Ireland.
“The cooler moments or conversations over a desk just can’t happen in a virtual environment and they are consciously thinking about recreating when working remotely,” said Hywel Ball, UK chairman of the EY accountant. .
“Simple actions, like making sure new colleagues are invited or informed after meetings, can make a huge difference in making people feel included.”
Companies should mitigate the risks of remote working to their culture by including reviews of work practices in their internal controls and ensuring that audit teams are empowered to challenge management to preserve the culture as the shift occurs. hybrid work continues, the CIIA said.
“We implemented a behavioral risk assessment that aims to be a forward-looking view of the culture, looking for warning factors that can lead to broader issues,” said Alison McFadyen, head of internal audit of the group at Standard Chartered Bank. The group interviewed people and encouraged people to speak out “to understand behaviors that could pose a risk related to organizational culture,” she added.