01-09-2005, 08:09 PM
All the Big 4 and other large national practices have in the last couple of years geared up on various programs to minimise an auditor's liability in any litigations. However, post Enron, it has becoming more of a daunting task. Having said that I think the following controls and procedures are effective
-maintaining a clear and complete set of audit work papers
-gathering audit evidence that is smart and that would be recognised/accepted in a court of law.
-developing and implementing internal firm controls that ensure audit plans and audit programs cover most audit issues.
-encouraging 'whistle blowers' within the audit firm across board. So that an assitant may also add value to the risk process.
-develop and implement risk assessments that are tailor suited for various industries and legal jurisdictions.
-Categorise certain industries 'normal than high risk' as an idustry requirement, for instance Banks, financial institutions, publicly traded companies.
-Develop regional offices/partners that specialise in risk assessment and are responsible for 'signing off' on risk clients.
These are some of the steps that 'the audit profession' at large could follow to minimise litigation and other legal implications.
As Azeem has pointed out - Professional indemnity/insurance is very much a mitigant resource, however, we have witnessed cases where the indemnity provider / insurer could only foot part of the bill. Moreover, professional indemnity does not cover you if you have been 'professionally negligent'. I guess tha age old idiom needs to be changed..
the auditor is a hunting dog that needs to point where the foxes are !
any comments guys/gals.
regards
"Allah does not change the state of people unless they change what is within themselves" Quran 1311
-maintaining a clear and complete set of audit work papers
-gathering audit evidence that is smart and that would be recognised/accepted in a court of law.
-developing and implementing internal firm controls that ensure audit plans and audit programs cover most audit issues.
-encouraging 'whistle blowers' within the audit firm across board. So that an assitant may also add value to the risk process.
-develop and implement risk assessments that are tailor suited for various industries and legal jurisdictions.
-Categorise certain industries 'normal than high risk' as an idustry requirement, for instance Banks, financial institutions, publicly traded companies.
-Develop regional offices/partners that specialise in risk assessment and are responsible for 'signing off' on risk clients.
These are some of the steps that 'the audit profession' at large could follow to minimise litigation and other legal implications.
As Azeem has pointed out - Professional indemnity/insurance is very much a mitigant resource, however, we have witnessed cases where the indemnity provider / insurer could only foot part of the bill. Moreover, professional indemnity does not cover you if you have been 'professionally negligent'. I guess tha age old idiom needs to be changed..
the auditor is a hunting dog that needs to point where the foxes are !
any comments guys/gals.
regards
"Allah does not change the state of people unless they change what is within themselves" Quran 1311
