If your company is subject to SOX compliance or other external audit requirements — or just engages external auditors as a cost of doing business — then you might experience an increased level of scrutiny from your auditors during the remainder of 2017.
That’s because a multitude of audit firms will be under increased scrutiny themselves as the Public Company Accounting Oversight Board (PCAOB) announced in late August it intends to review 195 registered auditors of public companies and other issuers in 2017 around a few key focus areas. The nature and extent of the PCAOB inspection findings continue to significantly influence how the audit industry executes and how companies design and operate internal controls.
Eleven U.S. firms that issued audit reports for more than 100 issuers — and are reviewed annually — are expected to be reviewed, alongside 55 non-U.S. firms in 26 jurisdictions. Audits will primarily focus on reviewing audit work performed on the 2016 financial statements of issuers.
The key areas of focus for 2017 PCAOB reviews include:
- Audit areas where inspectors have identified deficiencies in the past, such as assessing and responding to risks of material misstatement
- Audit areas affected by recent economic developments, including the high rate of merger and acquisition activity and fluctuations in oil and natural gas prices
- Financial reporting areas that require significant judgment, including going concern considerations and income tax disclosures
- An audit firm’s compliance with new transparency rules (Form AP)
- Preparation for new accounting standards for revenue recognition and lease accounting
- Work by other auditors on multinational audits
- The auditor’s use of information technology, particularly software audit tools
- The audit firm’s system of quality control
Whether your company is subject to external audits by choice or necessity, you’re no stranger to the always evolving regulations, compliance standards and audit requirements that can send your compliance and audit process into a tailspin.
For instance, having to meet enhanced evidence requirements or having to ensure that any decisions subject to a high degree of judgement are defensible to auditor can cost you time and money.
Further, if the technology you’re using to manage through all these changes requires significant development and the inclusion of third party consultants, you likely feel even more defeated.
And of course, all this comes when compliance and audit teams are being asked to innovate and do more with less while the regulatory market continues to evolve at a steady pace.
Fortunately, in the last several years integrated risk management technology has matured significantly to make compliance and audit management more agile — offering benefits like rapid deployment and modification; improved productivity for auditor and auditee; a reduction in reliance on IT staff; and an overall reduction in cost.
See first hand how modern integrated risk management technology can help you be more responsive to changing auditing requirements — without all the “hub-bub” that usually comes with such changes.