Update: Travel Travails

In a recent survey of 750 business travelers from France, the U.K., and the U.S. by travel agency Egencia, 73% say they have encountered some type of travel disruption. Many business travelers are using tactics to try to minimize travel snags: More than half indicate they have booked early-morning flights — under the assumption that they are less prone to delays or cancellation — and 40% say they avoid particular airlines or airports.

The disruptions have become so widespread and expected that many businesspeople are exploring alternatives to air travel. “About 50% of people are questioning a business trip because of what might happen,” said Egencia President Mark Hollyhead at the Global Business Travel Association conference in San Diego. “I don’t think we’ve ever had that before.”

Likewise, internal audit functions are concerned about travel, both from an assurance-providing perspective and an organizationwide risk perspective. The transition to more remote auditing processes and remote work rapidly accelerated during the pandemic, and ongoing travel disruptions only look to solidify these trends.

Uninvited Guests

The push toward digital transformation and the emergence of even more digital platforms for business and commerce have created new avenues for fraudsters to exploit. According to PwC’s Global Economic Crime and Fraud Survey, 40% of organizations that have experienced fraud over the last two years say it was connected to the digital platforms they rely on. Reliance on these platforms “opens the door to myriad fraud and other economic crime risks that most companies are just beginning to appreciate,” the report states.

The survey describes “an unsettling threat profile” emerging in the form of a rise in external threats that cannot be easily controlled or influenced, unlike insider threats. Nearly 70% of organizations experiencing fraud report that their most disruptive incident was from an external attack or collusion between external and internal sources. The top three types of external perpetrators committing fraud are hackers (31%), customers (29%), and fraudsters associated with organized crime (28%). 

The report details additional trends: Organized crime groups are becoming more professional, there is a rising trend of formerly law-abiding people engaging in fraud, and bad actors are collaborating online. “Thanks to chat rooms, the dark web, and cryptocurrency, specialists in data breach, false ID creation, attack methodology, and other nuanced areas can connect, coordinate, and transact with a growing criminal economy,” the survey explains. —Trinity Curbelo

Ask An Expert

Insight on Internal Audit

Based on the Internal Audit Foundation’s recent report, Internal Audit: A Global View, where is internal audit focusing its efforts?

The report found that internal audit functions are significantly involved in compliance (78%), fraud (57%), and enterprise risk management activities (56%). More than 50% of respondents say they are also significantly involved in IT and cyber-
security initiatives.

While these results are not surprising, there are some areas that showed low involvement. For example, only 22% of internal audit functions say they are involved in auditing third-party relationships, and 15% are involved in sustainability and nonfinancial reporting. 

Globally, government regulations for environmental, social, and governance areas may quickly escalate. Internal audit can expect to see more organizations seeking out its help, as a result.

In terms of funding, only 51% of respondents indicate their function’s funding is mostly or completely sufficient. Interestingly, one of the key drivers for adequate funding is having a functional reporting line to the audit committee, board, or board equivalent.