In June 2019, the fourth conference of the Foundation for Auditing Research (FAR) has been held. The theme of the conference was ‘Evidence informed policy making for the future of the auditing profession’. Professor Willem Buijink (Open Universiteit and FAR Academic Board member) chaired nine plenary sessions, spread over two days. In this article, the focus will be on the keynote speeches by Robert Knechel (University of Florida and Academic Board Member of FAR) and Miguel Minutti-Meza (University of Miami) and on the panel discussion regarding the theme of the conference.
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Continuous monitoring, continuous auditing and continuous assurance are three methods that utilize a high degree of business intelligence and analytics. The increased interest in the three methods has led to multiple studies that analyze each method or a combination of methods from a micro-level. However, limited studies have focused on the perceived usage scenarios of the three methods from a macro level through the eyes of the end-user. In this study, we bridge the gap by identifying the different usage scenarios for each of the methods according to the end-users, the accountants. Data has been collected through a survey, which is analyzed by applying a nominal analysis and a process mining algorithm. Results show that respondents indicated 13 unique usage scenarios, while not one of the three methods is included in all of the 13 scenarios, which illustrates the diversity of opinions in accountancy practice in the Netherlands.
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What is the ‘raison d’être’ of auditing? Does auditing only exist by the grace of the legislator? Or does auditing fulfill other needs in contemporary society? For many companies, auditing has been made mandatory. This is possibly one of the reasons why researchers to date have given limited attention regarding the drivers for the demand for audit. Auditing (seen as a social control mechanism) is part of an organizational order in society. Therefore, it is essential to reflect on the (changing) demands of society. As a lack of insight why society demands an audit, accommodates the risk of not meeting the needs and expectations of society, the added value of auditing may be called into question. This dissertation deals with the question: what are drivers for the demand for audit for Dutch SME companies which are not mandatory required to have their financial statements audited.
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What you don’t know can’t hurt you: this seems to be the current approach for responding to disinformation by public regulators across the world. Nobody is able to say with any degree of certainty what is actually going on. This is in no small part because, at present, public regulators don’t have the slightest idea how disinformation actually works in practice. We believe that there are very good reasons for the current state of affairs, which stem from a lack of verifiable data available to public institutions. If an election board or a media regulator wants to know what types of digital content are being shared in their jurisdiction, they have no effective mechanisms for finding this data or ensuring its veracity. While there are many other reasons why governments would want access to this kind of data, the phenomenon of disinformation provides a particularly salient example of the consequences of a lack of access to this data for ensuring free and fair elections and informed democratic participation. This chapter will provide an overview of the main aspects of the problems associated with basing public regulatory decisions on unverified data, before sketching out some ideas of what a solution might look like. In order to do this, the chapter develops the concept of auditing intermediaries. After discussing which problems the concept of auditing intermediaries is designed to solve, it then discusses some of the main challenges associated with access to data, potential misuse of intermediaries, and the general lack of standards for the provision of data by large online platforms. In conclusion, the chapter suggests that there is an urgent need for an auditing mechanism to ensure the accuracy of transparency data provided by large online platform providers about the content on their services. Transparency data that have been audited would be considered verified data in this context. Without such a transparency verification mechanism, existing public debate is based merely on a whim, and digital dominance is likely to only become more pronounced.
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Spreadsheets are known to be error-prone. Over the last decade, research has been done to determine the causes of the high rate of errors in spreadsheets. This paper examines the added value of a spreadsheet tool (PerfectXL) that visualizes spreadsheet dependencies and determines possible errors in spreadsheets by defining risk areas based on previous work. This paper will firstly discuss the most common mistakes in spreadsheets. Then we will summarize research on spreadsheet tools, focussing on the PerfectXL tool. To determine the perceptions of the usefulness of a spreadsheet tool in general and the PerfectXL tool in particular, we have shown the functionality of PerfectXL to several auditors and have also interviewed them. The results of these interviews indicate that spreadsheet tools support a more effective and efficient audit of spreadsheets; the visualization feature in particular is mentioned by the auditors as being highly supportive for their audit task, whereas the risk feature was deemed of lesser value.
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De maatschappelijke behoefte aan meer informatie over de strategie van de onderneming alsmede over de met die strategie samenhangende risico’s, vraagt om proactieve auditors met interpersoonlijke en veranderkundige competenties die weten hoe (netwerk)organisaties functioneren. Internal auditors die over het vermogen beschikken om het bestuur van de organisatie te bevragen op en te ondersteunen bij de kwaliteit van planvorming en de inrichting van het systeem van internal governance.
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Many organizations have undergone substantial reorganization in the last decade. They re-engineered their business processes and exchanged proprietary, not integrated applications for more standard solutions. Integration of structured data in relational data bases has improved documentation of business transactions and increased data quality. But almost 90% of the information that organizations manage is unstructured, can not easily be integrated into a traditional database. Just like structured data, unstructured information in organizations are records, meant and used as evidence for organizational actions and transactions. Governments, courts and other stakeholders are making increasing demands for the trustworthiness of records. This is part of a long-term trend toward defining what accountability means in a digital era. An analysis of literature of information science, organization science and archival science illustrates that for accountability, reconstruction of the past is essential. Hypothesis of this paper is that for the reconstruction of the past each organization needs (at least) a combination of three mechanisms: enterprise records management, organizational memory and records auditing. Enterprise records management ensures that records meet the for accountability necessary quality requirements: integrity, authenticity, controllability and historicity. These requirements ensure records that can be trusted. Trusted records enhance the possibility of reconstructing the past. The organizational memory ensures that trusted records are preserved for as long as is necessary to comply to accountability regulations. It provides an information and communication technology infrastructure to (indefinitely) store those records and to keep them accessible. Records auditing audits enterprise records management and organizational memory to assess the possibility to reconstruct past organizational actions and transactions. These mechanisms ensure that organizations have a documented understanding of: the processing of actions and transactions within business processes; the dissemination of trusted records; the way the organization accounts for the actions and transactions within its business processes; and the reconstruction of actions and transactions from business processes over time. This understanding is important for the reconstruction of the past in digitized organizations and improve organizational accountability.
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Wanneer een kwaliteitsmanagementsysteem net is opgezet, is het zinvol om een interne audit te beperken tot het onderzoeken of datgene wat is beschreven ook in de praktijk zo wordt uitgevoerd. Naarmate een interne audit vaker wordt gehanteerd, dient het doel te verschuiven van non-conformiteit naar sturing. Pas dan kan de auditor nagaan of doelstellingen van processen en management daadwerkelijk worden behaald en ontstaan zinvolle verbeteracties. Wanneer men bij interne audits blijft steken in het toetsen van non-conformiteiten, bestaat het risico dat het kwaliteitsmanagementsysteem niet verder wordt ontwikkeld en verbeterd. Uit de resultaten van een pilot onderzoek in het Medisch Centrum Alkmaar blijkt dat een combinatie van verschillende procedures voor auditing aanbeveling verdient. Aldus worden resultaten verkregen op meerdere management niveaus en op meer terreinen dan alleen het werkproces als zodanig. Discrepanties tussen de praktijksituatie en de beschreven procedures komen snel aan het licht, evenals opties voor verbetering van de efficiëntie van processen en procedures. De informatie is een belangrijke impuls voor verbetering van werkprocessen en biedt tevens aanknopingspunten voor verbetering van belangrijke thema’s en speerpunten in de organisatie.
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Het tekort aan handjes in de accountancy neemt toe. Tegelijk groeit de maatschappelijk druk om bedrijven zo goed mogelijk te controleren, om te zorgen dat ze financieel, fiscaal en qua duurzaamheid in de pas blijven lopen met de (toenemende) regelgeving. Gelukkig komt er steeds meer technologie voorhanden die de accountant kan helpen bij het controleren van de boeken, schetst Eric Mantelaers, hoofd Bureau Vaktechniek, RSM Accountants. Medio juni is hij aan de Open Universiteit gepromoveerd op zijn proefschrift ‘An evaluation of technologies to improve auditing’.
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Energy management and carbon accounting schemes are increasingly being adopted as a corporate response to climate change. These schemes often demand the setting of ambitious targets for the reduction of corporate greenhouse gas emissions. There is however only limited empirical insight in the companies’ target setting process and the auditing practice of certifying agencies that evaluate ambition levels of greenhouse gas reduction targets. We studied the target setting process of firms participating in the CO2 Performance Ladder. The CO2 Performance Ladder is a new certifiable scheme for energy management and carbon accounting that is used as a tool for green public procurement in the Netherlands. This study aimed at answering the question ‘to what extent does the current target setting process in the CO2 Performance Ladder lead to ambitious CO2 emission reduction goals?’. The research methods were interviews with relevant stakeholders (auditors, companies and consultants), document reviews of the certification scheme, and an analysis of corporate target levels for the reduction of CO2 emissions. The research findings showed that several certification requirements for target setting for the reduction of CO2 emissions were interpreted differently by the various actors and that the conformity checks by the auditors did not include a full assessment of all certification requirements. The research results also indicated that corporate CO2 emission reduction targets were not very ambitious. The analysis of the target setting process revealed that there was a semi-structured bottom-up auditing practice for evaluating the corporate CO2 emission reduction targets, but the final assessment whether target levels were sufficiently ambitious were rather loose. The main conclusion is that the current target setting process in the CO2 Performance Ladder did not necessarily lead to establishing the most ambitious goals for CO2 emission reduction. This process and the tools to assess the ambition level of the CO2 emission reduction targets need further improvement in order to maintain the CO2 Performance Ladder as a valid tool for green public procurement.
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