Gideon Gale’s Post

Audit Smarter by Reassessing Audit Risk, by Gundi Jeffrey https://lnkd.in/gqHnbmZu

⚠ 𝑨𝒖𝒅𝒊𝒕 𝑰𝒏𝒅𝒖𝒔𝒕𝒓𝒚'𝒔 𝑹𝒊𝒔𝒌 𝑩𝒍𝒊𝒏𝒅𝒔𝒑𝒐𝒕 𝑬𝒙𝒑𝒐𝒔𝒆𝒅: 75% 𝒐𝒇 𝑼𝑲 𝑪𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆 𝑪𝒐𝒍𝒍𝒂𝒑𝒔𝒆𝒔 𝑼𝒏𝒇𝒐𝒓𝒆𝒔𝒆𝒆𝒏 ⚠ A recent Financial Times article highlights a glaring risk management failure within the UK audit industry: three-quarters of major corporate collapses since 2010 went undetected. This alarming statistic, revealed in a report by the Audit Reform Lab, raises serious concerns about the effectiveness of current risk assessment practices in audits. The research found that 75% of audit reports did not identify a "material uncertainty related to going concern" in the year leading up to the company's collapse. This omission suggests a potential overreliance on historical data and a failure to adequately assess emerging risks that could jeopardize a company's financial viability. 𝑲𝒆𝒚 𝑻𝒂𝒌𝒆𝒂𝒘𝒂𝒚𝒔: 𝟏- Proactive Risk Management: The findings emphasize the need for a more proactive, forward-looking approach to risk assessment in audits, incorporating scenario analysis and stress testing to identify potential vulnerabilities. 𝟐- Enhanced Professional Skepticism: Auditors must exercise greater professional skepticism and challenge management's assumptions to ensure a comprehensive evaluation of risk. 𝟑- Strengthened Regulatory Oversight: Regulators and oversight bodies should demand more rigorous risk assessment methodologies and hold audit firms accountable for their risk management failures. 𝑯𝒐𝒘 𝒄𝒂𝒏 𝒕𝒉𝒆 𝒂𝒖𝒅𝒊𝒕 𝒊𝒏𝒅𝒖𝒔𝒕𝒓𝒚 𝒆𝒗𝒐𝒍𝒗𝒆 𝒕𝒐 𝒃𝒆𝒕𝒕𝒆𝒓 𝒊𝒅𝒆𝒏𝒕𝒊𝒇𝒚 𝒂𝒏𝒅 𝒎𝒊𝒕𝒊𝒈𝒂𝒕𝒆 𝒓𝒊𝒔𝒌𝒔, 𝒖𝒍𝒕𝒊𝒎𝒂𝒕𝒆𝒍𝒚 𝒔𝒂𝒇𝒆𝒈𝒖𝒂𝒓𝒅𝒊𝒏𝒈 𝒊𝒏𝒗𝒆𝒔𝒕𝒐𝒓𝒔 𝒂𝒏𝒅 𝒔𝒕𝒂𝒌𝒆𝒉𝒐𝒍𝒅𝒆𝒓𝒔? #audit #riskmanagement #corporaterisk #auditrisk #financialrisk #accountability #corporateculture #governance #riskassessment #internalaudit #GRC

This article about the flexibility required from audit plans to stay ahead of the risk curve was interesting to read. You might not fully agree with the annual audit plan suppression, yet you will recognize the need for more agility in audit planning. https://lnkd.in/gyqzv4Hm

#SEC Auditing Quality Control Statement The SEC is reviewing a new standard for audit firm quality control. I support this measure to enhance audit quality and protect investors. The update is crucial, as outdated PCAOB standards have not kept pace with industry changes. The new standard will: Require proactive risk management. Enforce ongoing monitoring and improvement. Hold leadership accountable for quality control. Tailor requirements based on firm size and practice. For the largest firms, independent evaluations will be required. These updates, twenty-two years after Sarbanes-Oxley, aim to restore investor trust and market integrity. #SEC #AuditQuality #PCAOB #QualityControl #InvestorProtection #SarbanesOxley #FinancialRegulation #AuditStandards #CorporateGovernance #MarketIntegrity https://lnkd.in/gdKyW-fG

This PCAOB rule could reshape the assurance industry and would have a direct impact on the risk / reward relationship of organizations that have both assurance and advisory practices. By its very nature, it merits deep review, commentary and consideration. #PCAOB #assurance #risk #cfoadvisory #managementconsulting

#auditing #risks #reassessment "To provide solutions, the CPEA developed Reimagining Risk Assessment (RRA) after multiple years of development, thought, and reflection. RRA provides concrete fundamental steps within a firm’s audit methodology to reimagine risk assessment in a more focused and efficient way while also reframing it as a strategic opportunity and potential competitive advantage." https://lnkd.in/dni3SpXh

Great read about reassessing audit risk. Thoughts on the "Beat up the balance sheet" (BUBS) approach? Do you consider it to be inefficient and not add value? CPEA developed Reimagining Risk Assessment (RRA) which provides "concrete fundamental steps within a firm’s audit methodology to reimagine risk assessment in a more focused and efficient way while also reframing it as a strategic opportunity and potential competitive advantage."

Stay informed and ahead of regulatory hurdles! Our latest article shines a spotlight on the crucial role of internal auditors in maintaining a robust compliance framework. Discover why compliance isn't merely a box to tick but a necessity for risk management and your organization's success. Let's dive together into the risks of non-compliance and strategies for effective compliance management. Tap on the link to read more!  #InternalAudit #RiskManagement #RegulatoryCompliance

Stay informed and ahead of regulatory hurdles! Our latest article shines a spotlight on the crucial role of internal auditors in maintaining a robust compliance framework. Discover why compliance isn't merely a box to tick but a necessity for risk management and your organization's success. Let's dive together into the risks of non-compliance and strategies for effective compliance management. Tap on the link to read more!  #InternalAudit #RiskManagement #RegulatoryCompliance