One of the most significant impacts that COVID-19 has had on organizations is the fast movement from an onsite workforce to a largely remote workforce. Along with this change have come a couple of significant benefits, as well as pitfalls.
One benefit of a remote workforce has been that people seem to be working more hours versus spending time commuting on a daily basis. Additionally, with the decline in the ability to travel, employees have also decreased the amount of time spent away from their jobs. While this comes with its benefits, there are also downsides to be considered. For instance, the increased number of hours worked has resulted in increased burnout, a potential decline in an organization’s culture, and changes to its internal controls.
Organizations need to consider how to identify fraudulent activities in a remote environment, as well as how to address the changes in their internal control environment. On an annual basis, organizations should update their internal policies and procedures to adequately reflect how the organization is conducting operations. In the current year, this may result in significant changes to their policies and procedures. Further, an organization may have two sets of policies and procedures, one that speaks specifically to the remote workforce and one to the way operations were before the pandemic.
Organizations should also consider the use of data analytics to identify unusual patterns within their organization. This may include reviewing various timesheets for abnormalities, unusual expense activities (perhaps significant travel expenses), or something as simple as the total number of employees compared to the number of individuals receiving a payroll check. Through data analytics, additional risks may be identified and investigated, which could uncover gaps in a company’s internal control environment.
With the move to a remote workforce, many organizations have questioned the need to maintain their current footprint. This may result in many organizations decreasing their number of retail locations, business offices, and other outlets for their product. Some organizations may determine that going entirely to a web-based approach is sufficient for servicing their customers. All of these decisions have potential accounting implications. Such implications include accounting for lease termination costs, potential restructuring charges, and impairment of capital improvements. While the overall costs associated with closing a location may seem straightforward, there is the potential for unintended consequences. For instance, an increase in infrastructure to support the changes in the operations may result. Organizations will need to determine if such a significant reduction away from their current retail footprint is sustainable as the economy begins to open back up.
Organizations will be faced with many difficult decisions as the pandemic begins to subside. What the organization looked like a year ago may be drastically different from the way that it operates today. Our Bonadio Strategic Advisory practice is here to help you move forward – contact us today to discuss your specific situation.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We, therefore, make no warranties, expressed or implied, on the services provided hereunder.