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Post-Pandemic Internal Control Considerations for Your Business

Daniel M. Bergvall, CPA Manager, Audit & Accounting
Brian J. Sharkey, CPA, CVA, CEPA Director-in-Charge, Transaction Advisory & Business Valuation

Internal controls

We are all aware that the pandemic turned businesses upside down and caused many to quickly pivot and adapt to an ever-changing environment. Now we are beginning to see more and more companies return to the more traditional, pre-pandemic office setting as vaccination rates continue to rise. However, the remote work lifestyle has caused various processes to be altered in order to accommodate employees who were not physically on company premises. These changes were necessary to ensure operations were not negatively impacted during the peak of the pandemic, but in certain cases resulted in a more efficient, streamlined process. They could also be continued in the future since they represent an overall improvement; however, it is still critical for management to take a step back and make sure that such changes in accounting procedures and policies continue to promote a strong and effective internal control environment.

Below are some internal control considerations during this transition period:

Is segregation of duties still adequate?

With the switch to remote working environments, many businesses streamlined processes that were historically paper-based. As a result, steps that existed within the pre-pandemic process may have been eliminated to alleviate process bottlenecks. Although these eliminations may be viewed as an enhancement from an efficiency standpoint, they may also create a weakness from an internal control standpoint.

For example, the pandemic environment forced many businesses to use electronic payment features more frequently within their disbursement processes, and in certain cases companies began using wire payments to pay vendors for the first time. This can be a significant change, and if not set up properly, can result in an internal control weakness. Companies that have changed their electronic payment practices during the pandemic should take the time to ensure that segregation of duties exists and have the proper approvals in place before the cash walks out the door.

The same can be said for the other processes regarding payroll, cash receipts, and treasury management.

Is supporting documentation maintained?

Similar to the above, during the pandemic businesses may not have been as diligent with documentation practices. Now that businesses are returning to normal, it is a good time to assess documentation requirements and retention practices. Remote working and paperless go hand-in-hand; however, paperless does not mean document-less. Supporting documentation still needs to be adequately maintained. The good news is many ERP systems accommodate paperless environments by allowing supporting documents to be scanned and housed within the database.

Is there still oversight of financial processes and reporting?

Oversight of financial processes and reporting may have slipped during the pandemic and if this is the case, oversight should be reimplemented immediately. Oversight is one of the biggest deterrents to fraud. If we think about the Fraud Triangle, we are reminded that it includes three key elements: (1) Pressures, (2) Rationalization, and (3) Opportunity. Pressures and rationalizations may very well result from the pandemic environment, but we can thwart opportunity by implementing proper oversight. Put simply, individuals are less likely to steal when they feel as if someone is watching.

Have new policies been documented?

With any new policy or procedure, it is important to make sure that manuals, job descriptions, and internal policy memos are updated accordingly. Some of the pandemic-related changes may have occurred more than a year ago at this point, and may simply be the new normal to the individual who performs the process. However, it is likely that the procedure manual for such a task may not be updated and it may be difficult for someone else to step in during an emergency.

Undoubtedly, the pandemic changed how companies operate, particularly in the areas of technology, employee communication, and financial processes. Many, if not all, of these changes will result in long-term improvements and save time. But this does not supersede the need to ensure that proper internal controls are maintained to safeguard company assets. As always, Kreischer Miller is available to assist you in assessing your company’s internal controls and providing practical considerations for improvement.


Daniel M. Bergvall,  Manager, Audit & Accounting
Brain Sharkey, Director-in-Charge, Business Advisory Group

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Daniel M. Bergvall, CPA

Daniel M. Bergvall, CPA

Manager, Audit & Accounting

Not-for-Profit Specialist, Construction Specialist

Brian J. Sharkey, CPA, CVA, CEPA

Brian J. Sharkey, CPA, CVA, CEPA

Director-in-Charge, Transaction Advisory & Business Valuation

Manufacturing & Distribution Specialist, M&A/ Transaction Advisory Services Specialist, ESOPs Specialist, Business Valuation Specialist, Owner Operated Private Companies Specialist, Private Equity-Backed Companies Specialist

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