ICAEW Conference – Auditors urged to examine risk

Danielle Stewart, London-based auditor of Warrender Stewart, called for a new kind of auditor for the 21st century, writes John Stokdyk.

Instead of the ‘cowardly hill-top observer, sneaking up to bayonet the battling businessman with provisions and threats of going concern qualifications’, Stewart urged auditors to embrace risk management and to rely more on businesses’ high-level controls.

She backed the risk management strategy proposed by the English ICA’s financial reporting committee and called for a shift in auditors’ focus on risks from audit to management.

Where business managers have developed good high-level monitoring methods and controls, said Stewart, auditors could use these to reduce the amount of substantive work they needed to do.

A traditional, box-ticking approach would not establish that these controls existed, or the business risks involved, she added. If, as the committee proposed, accountants conducted a risk assessment as part of the annual report, then auditors would at least be able to report that the risks existed.

‘However, I would be nervous of reporting anything until we sort out the liability debate,’ she said. ‘We don’t want to be jumped on by claims against us.’

Related reading