Financial statement audits are not only an exercise in compliance, but also an opportunity to gain knowledge that can drive positive business results, according to a new survey.
In many cases, however, companies do not take full advantage of the information provided by audits, a survey of 300 executives and 100 audit committee members by Deloitte’s US audit practice found.
According to the survey report, which was posted on Wednesday:
- More than three-quarters (79%) of executives and 91% of audit committee members say financial statement audits identify opportunities to improve business performance.
- Almost half (46%) of executives and even more audit committee members (62%) say that it is at least somewhat likely that they would have missed important information if the audit had not had place.
- Companies that regularly capitalize on information received from the audit are more likely to have achieved growth in the past three to five years that survey respondents rate as âgoodâ or âexcellentâ.
âObviously, quality is the basis here. We always have to do a good quality audit to start, âsaid Adam Weissenberg, CPA, the national managing partner of audit â Clients & Industries for Deloitte & Touche LLP. âIf we also provide information and use it as a way to help the company know things that it didn’t know, that should be a valuable part of the audit, and our client would appreciate it. “
Through audits, companies can gain new insight into their industry and market, uncover gaps in processes and policies, and identify inefficiencies and risks. The increased use of data analytics helps auditors examine large pools of data in various fields to find information that could be of use to clients.
Whether it’s journal write testing, analyzing the content of many leases in a company, or gathering information from multiple contracts, data analytics gives auditors the ability to find anomalies and uncover inefficiencies that might have remained hidden in the past. This information can provide important information that audit clients can act on.
However, financial statement audits often represent a missed opportunity for companies. According to the Deloitte survey, more than one in three companies (35%) rarely or never use the information received from their financial statement audits to improve their business. About half of executives (45%) and audit committee members (48%) whose companies do not always use information from their audits do not have a process in place to leverage the information that can be gleaned from them. ‘an audit.
Weissenberg suggested that auditors, management, and audit committees could use the following tactics to ensure that the client gets maximum value from the audit:
Communicate. Management, audit committees and auditors need to ensure that they communicate frequently to ensure that the business is aware of and benefits from the information that auditors discover. By providing follow-up and verification with management and the audit committee, auditors can ensure that their views have been understood.
Train listeners in judgment and communication. “We must continue to work [developing] the skills of our teams so that they can achieve it, they have the ability to communicate effectively, they have the ability to take all these analyzes and innovations that we have made and discern from that what type of information is important to share with audit committees, âWeissenberg said.
The survey offers good news for those who continuously strive to make the quality of audits as high as possible, as 83% of executives and 83% of audit committee members assessed the reliability of the information provided during the survey. ‘an audit as good, very good or excellent. .
âThere is an inherent confidence that auditors are doing their job,â Weissenberg said, âand that auditors do a good, quality audit, and that audit committees would view us as an independent source to do what we’re supposed to do. to do.”
–Ken tysiac ([email protected]) is a JofA Managing Editor.