by: Kaylyn Landry, Senior Manager | CPA, MSA at BerryDunn & David Stone, Manager | CPA, MBA, CFE at BerryDunn Read this if you have a blended workforce with both ...
<em>by: Kaylyn Landry, Senior Manager | CPA, MSA at BerryDunn & David Stone, Manager | CPA, MBA, CFE at BerryDunn</em> Read this if you have a blended workforce with both in-office employees and remote workers. It is hard to believe it has been nearly a year and a half since we started our remote work journey. At the time, many thought the move to working remotely would be short term. Then, a couple of weeks turned into a month, a month into another month, another month into a year and, some employers are now finally considering re-opening their offices. Back in April 2020, we provided some internal control challenges, and potential solutions, faced by working in a remote environment. These challenges included exercising appropriate tone at the top, maintaining appropriate segregation of duties, and ensuring timely review, amongst others. Although these challenges still exist, there are new considerations to address as we transition into (hopefully) a post-pandemic world. <strong>Blended workforces</strong> As we mentioned in that article, since people have now been forced to work in a remote environment, they will be more apt to continue to do so. For some employees, the perks of ditching that long commute outweighs the free coffee they receive in the office. Employers have a decision to make—do we allow our employees the option to continue to work from home or, do we require employees to work from the office, as was standard pre-pandemic? Now that employees have exhibited the ability to work from home efficiently and effectively, it may be difficult to move all employees back into the office. Requiring all employees to return to the office could result in employees seeking employment elsewhere, and the option to work remotely is a selling point for many recruiters. Furthermore, disallowing remote work could cause employees to feel distrusted or undervalued, possibly leading to less efficient and effective work. However, remote work comes with many challenges. Although video chat has been instrumental in navigating the remote work environment, it still has limitations. Nothing can beat in-person conversations and the relationships they help build. Nearly every video chat has a purpose, and unfortunately, you can’t just “run” into somebody in a video chat as you can in the office. Building camaraderie and instilling your company’s culture is difficult in a remote environment. And, if your workforce is blended, with some working in the office while others work remotely, building culture may be even more difficult than if your entire workforce was remote. Employees in the office may be less apt to communicate with remote colleagues. If you have a task you wish to delegate, you may think of giving the assignment to someone in the office prior to thinking of your remote co-workers that may be just as able and willing to complete the assignment. It will be important to ensure all employees are provided with equal opportunities, no matter of where they work. <strong>Remote work policy</strong> Regardless of your company’s decision to allow employees to work remotely or not, we recommend developing a remote work policy addressing expected behaviors. When developing such a policy, consider: Will the policy’s provisions apply to the entire company or will there be different provisions by department? If the latter, consider what the implications may be on employee morale. Will there be a minimum amount of days per week that must be spent in the office? If employees are allowed to work remotely, do they need to work a set schedule or can the frequency, and which days they work remotely, change from week to week? Who should the employee communicate their decision to? How will this information then be shared company-wide? How do remote employees address document destruction? If they are handling sensitive and confidential documents, how should they dispose of these documents? Similarly, what are the expectations for protecting sensitive and confidential information at home? Are employees allowed to hook up company-provided equipment to personal devices, such as personal printers? If an employee is customer/client facing, what are the expectations for dress code and backgrounds for video chat meetings?\ What will staff development look like for individuals working remotely? Alternatively, what will their involvement look like in onboarding/developing new employees? What are the expectations for meetings? Will all meetings be set up in a manner that accommodates in-person and remote attendees? Are there meetings where in-person attendance is mandatory? The importance of these considerations will likely differ from company to company. Some of these considerations may be addressed in other, already existing policies. <strong>Are your internal controls “blended workforce” ready?</strong> If your company plans to allow employees to work remotely, you will need to assess if your internal controls make sense for both in-office and remote employees. Typically, internal controls are written in a manner irrespective of where the employee resides. However, there may be situations that require an internal control be re-worked to accommodate in-office and remote employees. For instance, do you have an internal control that references a specific report that can only be run in-office? If the control owner plans to transition to a hybrid work schedule, does the frequency of the internal control need to change to reflect the employee’s new schedule? Alternatively, does it make sense to transition this internal control to someone else that will be in the office more frequently? <strong>Internal control accommodations</strong> The transition to a remote environment was expeditious and many thought the remote environment would be over quickly. As a result, there may have been modifications to internal controls that were made out of necessity, although they were not ideal from an internal control standpoint. The rationale for these accommodations may have been the expectation that the remote environment would be short-lived. Although these accommodations may have made sense for a short amount of time, and posed little to no additional risk to your company, the longer these accommodations remained in effect, the greater the chance for unintended consequences. We recommend reviewing your internal controls and creating a log of any internal control accommodations that were made due to the pandemic. Some of these modifications may continue to make sense and, after operating under the new internal control for an extended period of time, may even be preferable to the previous internal control. However, for those modifications that do appear to have increased control risk, control owners should assess if the length of the pandemic could have resulted in inadequately designed internal controls. And, if so, what could the consequences of these poorly designed internal controls have been to the company? <strong>Internal control vs. process</strong> While reviewing your company’s internal controls, it will also be a good time to ensure your internal control descriptions actually describe an internal control rather than simply a process. Although having well-documented processes for your company’s various transaction cycles is important, a good internal control description should already incorporate the process within it. Think of your internal control descriptions as writing a story—the “process” provides background information on the characters and setting, while the “internal control” is the story’s plot. <strong>For example</strong>: The Accounting Manager downloads the market values from the investment portfolio accounting system and enters the market values into the general ledger on a monthly basis. Once the journal entry is entered, the Accounting Manager provides the market value report and a copy of the journal entry to the Controller. Although a savvy reader may be able to identify where the internal control points are within this process, it could easily be modified to explicitly include discussion of the actual internal controls. The text in bold below represents modifications to the original: The Accounting Manager downloads the market values from the investment portfolio accounting system and enters the market values into the general ledger on a monthly basis. Once the journal entry is entered, the Accounting Manager provides the market value report and a copy of the journal entry to the Controller via email. <strong>This email serves as documentation of preparation of the journal entry by the Accounting Manager. The Controller then reviews the market value report against the journal entry for accuracy. Once approved, the Controller posts the journal entry and replies to the email to indicate their review and approval. The Accounting Manager saves the email chain as auditable evidence.</strong> The text additions in bold font help provide a complete story. A new employee could easily read this description and understand what they need to do, and how to appropriately document it. Most importantly, the internal control is both in-office and remote environment friendly. Transitioning back to the office has resulted in a mixture of excitement and anxiety. Routine office norms, such as shaking hands and having a spontaneous meeting over a cup of coffee need to be relearned. Likewise, policies and internal controls need to be revisited to address the changing landscape. The more proactive your company can be, the better positioned it will be to accommodate its employees’ demands, while also maximizing the effectiveness of its internal controls. Please contact David Stone or Dan Vogt if any questions arise. <em>Original article published on August 19, 2021, https://www.berrydunn.com/news-detail/may-the-blended-workforce-be-with-you-policy-and-internal-control-considerations-for-a-new-era </em>
