February 26, 2021
Google Reports Remote Working Risks: Are You as Concerned as Big Tech?
In Alphabet Inc’s (the parent company of Google) recent 10-K filing for the year-end 2020 they addressed risks facing their operations, stating:
“The prolonged and broad-based shift to a remote working environment continues to create inherent productivity, connectivity, and oversight challenges…the changed environment under which we are operating could have an effect on our internal controls over financial reporting as well as our ability to meet a number of our compliance requirements in a timely or quality manner.”
This statement is striking.
Alphabet presumably has access to the best technology and tools to address the shift to a remote work environment. Yet, they still believe there is a risk to internal controls over financial reporting and their ability to meet compliance requirements.
Alphabet appears to be continually monitoring the risks raised in the remote work environment as this statement appeared in every 10-Q filed by Alphabet in 2020.
How Does Your Organization Compare?
Alphabet’s statements should further encourage all organizations to assess their risks. Boards are asking questions like:
- How is the organization assessing and monitoring risks associated with the remote work environment?
- Has the organization evaluated the impact on internal controls around financial reporting and compliance?
- Have the internal control monitoring activities been updated to reflect the changing environment?
Periodic Risk Assessments
Organizations have likely evaluated new risks as a result of our new work environment, but have these risks been revisited as organizations learn more and make adjustments to their processes? An annual risk assessment does not address how quickly companies are defining their remote work processes.
Financial Reporting and Regulatory Compliance
Many organizations initially delayed updating internal control activities for what they expected to be a temporary situation. For organizations embracing work from home for the long-term, how have internal controls been updated? A specific assessment of changes to the financial reporting process in a remote environment should be performed.
Has Internal Audit or another resource performed a review of processes affected by remote work? Continuous monitoring tools, such as a vendor creation and change dashboard, can also be deployed to review business processes affected by these changes.
Even as the U.S. is hopefully nearing larger-scale safe returns to the office, organizations will likely have more remote workers than they did a year ago. Leaders will see the need to continually assess and update the risks associated with this new environment and the organization’s monitoring activities.
If you have any questions about improvements your team can make to your risk assessments, contact the Johnson Lambert team.