How can we restore faith in our Audits?
Audit season is upon us and, as we watch our auditors poring over our files, we might well find ourselves questioning the value of this annual exercise. Audits have certainly come in for some bad press in recent years and faith in them has fallen considerably.
Since Sarbannes Oxley, there has been a growth in the guidance and regulation of financial reporting for companies. The latest guidance from the Financial Reporting Council (FRC) on Going Concern and Liquidity Risk and the creation of the International Financial Reporting Standard for SMEs bear testimony to that. However, trust in our audits remains low.
How can we improve faith in our audits?
The National Audit Office (NAO) has produced a helpful PDF which you can download from their website called Helping your Audit Committee add value. This recommends the following key points:
- Give the Committee a clearly defined role and well understood remit
- Ensure the Committee understands its risk management responsibilities
- Create a committee which contains the right mix of individuals and skills to make informed decisions
- Maintain good communications between the Committee and those who have the information it requires
- Build strong relationships between the Committee and the business
- Make sure the Committee runs efficiently
- Make use of Committee members’ individual expertise
In NAO’s PDF, each of these 7 points is backed by clear advice on how best to achieve your goal of producing audits which reflect the current position of the business and communicate clearly with the reader so that your audience can have faith in your auditing process.
At Sue Rees, we are always trying to find ways to make life better for our clients. We hope you found this newsletter interesting and we are very happy for you to share it in its entirety with your colleagues and contacts.