We study the past to avoid making the same mistakes again. Sometimes an event can be so unique and powerful - sometimes in a negative way - that it provides almost immediate insights. This is what happened with the COVID-19 crisis. Even though most companies in Dubai and UAE are still amid its effects, leaders have a lot to learn. This idea is best expressed in an internal audit.
In the wake of the coronavirus outbreak, we want to investigate the role of internal audit firms in Dubai. This crisis revealed the weaknesses in many UAE firms' plans and operations and highlighted areas where internal audit functions can help. Recent events have demonstrated that extreme what-if situations are possible. We are here to assist.
Assessing Risk Assessment
That's quite a mouthful. It's both mouth-twister and great. Because it covers many operations, it's the best way to evaluate COVID-19's effect on IA. All of them make up Enterprise Risk Management. Anyone who has attempted to jigsaw a large number of pieces will know that it can be difficult to see the end. This can prove frustrating, to say the worst. This can be fatal for companies as well as their risk management.
We all knew that a pandemic was possible. Was it something we should have prepared for? Or a terrorist attack. Are natural disasters possible again? These questions can all be answered with a resounding yes. Dubai and UAE companies should expand the ERM they have and not just provide lip service.
This is the first step of this internal audit process. What can you do now to determine what to include in your ERM? This is a simple poll of your leaders. C-suite members may not be omniscient, even though they are highly skilled and knowledgeable. This is the problem with so many risk assessments. These assessments are more of a checklist than an in-depth look at factors and forces that could cause havoc in your operation.
Read also : Check list for an Internal Audit of your Business firm in Dubai
External Risk Factors
New regulations and policies that result from the coronavirus outbreak will affect all individuals and companies in UAE.
- Cash Flow and Liquidity
- Evaluate your cash flow and working capital needs.
- People, Workforce, and Customer Base
- Remote working can have a major impact on your financial position
- Consider remote workers when evaluating HR performance.
- Company culture and the wellbeing of your people are very important.
- Revision of the communication strategy for customers and partners
- Demand and supply
Internal audit services Dubai specialists should be prepared for any changes in the demand and any adjustments to your stock or resources to meet these new levels. Assess of the entity, or third-party partner have sufficient resources to support critical activities at an acceptable level.
A holistic, integrated view of all supply chains will help you maximize your short-term cash flow. It would help if you collaborated with suppliers, vendors, and customers to maximize your working capital. Review disaster recovery plans (DRPs) and ensure they include all details. This is a crucial task for your company's survival, even though it may not be the most important.
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Supply Chain Risk
UAE managers need to ask deeper and more complex questions to plan for extreme situations. These are the scenarios that were unlikely to occur, at least for a few months. Supply chains are a great example of what we're talking about. Modern logistics is based on the just-in-time model. This allows orders to be fulfilled quickly and efficiently with minimal lead time or inventory. But, interruptions in the supply chain could have a catastrophic ripple effect.
Best Practices
We have already mentioned that internal audit service UAE experts need to examine your supply chain and identify any weaknesses that could make it vulnerable to the pandemic. This is where outside assistance can be very beneficial. They can spot potential weaknesses that might have been missed. They can inspect your ERM to identify potential risks and then take them through your pipeline to improve your working capital management. This is critical for optimizing cash flow and vendor selection.
Considerations
Vendors and compliance officers should be involved in rebuilding or refining your supply chain. It is important to look at other areas to reduce the chance of vendors being concentrated in one place. Be aware of vendors not located in familiar areas, as mentioned previously. These vendors could pose an additional risk. Restructuring, divestiture, ownership change, and other factors can affect vendors' ability to fulfill your requirements.
SOX and Compliance Considerations
There will be many things you need to pay attention to in improved risk assessment. Audit compliance will be affected by many of these items. Let's start with the easiest: suppose that a Dubai entity switches to remote work as many companies did in Q2 2020 or Q3 2020. If a company is new to this, there will be gaps in what they know.
Entities may have a team spread out across the office rather than being centralized at one location. This could lead to certain processes and controls failing or even breaking down. These dynamics can cause the team not to complete certain tasks or be as thorough as they should if you don't account. Travel restrictions can cause disruptions in your normal processes and disconnect in communication.
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Kasun Liyanage is an Audit Manager with over 7 years of experience dealing with diversified corporate clients. He not only manages the team’s work schedule but also is an expert in handling audit areas such as external audits and fraud investigation, Internal control benchmarking and best practices and well as preparation of financial statements and IFRS compliance.
