In this article a financial crisis has occurred that has allowed the number of auditing firms to fall
immensely. This fall led to a decrease in the cost of auditing services due to competition between
auditors. This is bad for an auditing firm because it can lead to a fall in audit service quality. This
auditing failure came from the fall in audit fees. The audit could have been avoided if the firm
took charge immediately to make sure quality was keeping up to standards. Keeping quality up to
standards would have allowed for the company to keep their fees at their current price. This
article confirms my opinion on the current climate in auditing because many things can happen at
any time that can cause something within your firm to change which can result in an outcome that
may be good or bad for the firm.
According to Albrecht, the most pressing trends in Auditing are the widespread issues of fraud. In
the article “Current Trends in Fraud and its Detection” they explore the causes of fraud and the
fraud triangle. In addition, Albrecht, breaks the fraud triangle down into 9 element of the perfect
storm conditions that are conducive to carryout fraud, good economy, moral decay, misplaced
incentives, unrealistic expectations, large debt, selective interpretation, behaviour, greed, and
education. SOX and other regulations have been issued by the government in response to multiple
outbreaks of large fraud cases. The big question asked was, are these regulations working.
According to Albrecht, they do. Regulations put forth by govt. bodies are effective in reducing
financial fraud. Auditors are encouraged to perform a “Fraud Audit” instead of a “GAAS Audit” in a
case of high-risk clients. This is a stronger and bigger process that takes 50 times longer and cost
70 times more that the GAAS Audit. In a Fraud Auditors work to uncover fraud rather than a
reasonable assurance and will come through a lot more accounts with a fine tooth. Hope you all
are doing well and I am sure you are glad to almost be done with class. For this week's discussion I
found an article called "The Evolution of Audit in the wake of the Pandemic". This article talks
about the newest trends since Covid changed all our lives in many ways. One trend due to covid, is
that people are working from home. While this was required for some time in many places, it
seems to have a started a trend. Now that people are safer to go back to "real life", people find it
more convenient to work from home, especially with the rise in gas prices over the last year. This
means that new technology has been developed to make working from home possible. One
challenge this trend presents is that auditors will need to continue learning about new
technologies to keep up with the latest developments in this trend. The article mentions that this
could be a challenge. The article also talks about how a lot of companies are using a cloud-based
data extraction technology. It seems to me that this would rely too heavily on being able to
upload that information. If information failed to upload then this could cause many problems. It is
also my opinion that certain things will get overlooked when working from home. An auditor could
be an expert on the new technology, but if they never step foot inside the business itself, they
may not be able to access risk as well. They may not be able to determine, with certainty, what
internal controls are in place and whether they are sufficient or if they need improved upon. I just
started working at my current job in August as its accounts receivables person. I can tell working
there in person that there are things that need to be improved upon, but if I was not there in
person, I would have no idea what everyone else is doing or not doing.
The article I found that I want to talk about is “Internal audit and cybersecurity in the wake of the
coronavirus pandemic.” The trend mentioned in the article that I think could be the most
concerning moving forward is about how there are now real concerns with employees accessing
company networks and information on unsecured internet connections and what that means for
risk assessment and the cybersecurity aspects of auditing.
In the article, the author Fraser Doig speaks about the concerns regarding internal auditing in 2020
in the direct aftermath of the Covid outbreak and how auditors were handling audits that year but
as we now know, the corporate landscape has been changed by the pandemic, at least for the
foreseeable future. Mr. Doig speaks about how cybersecurity is a major issue as criminals have
used the pandemic as an opportunity to utilize technology to carry out their crimes at a much
higher rate by using social media and sites like LinkedIn to target specific employees with phishing
attempts to compromise business email and gain access to company information. He lists several
cybersecurity challenges in these new times and then suggests ways for auditors to collaborate
with companies to help mitigate risks and help train employees.
What I find most concerning is the inherent risk that remote work brings to the company. For all
the good it can do for productivity and employee retention, from an auditing perspective, it poses
a massive challenge from an internal control and data security standpoint. Completing a risk
assessment for a company with a significant portion of its workforce working remotely could be a
massive undertaking where professional judgment is utilized at a much higher concentration with
less data informing that judgment. With employees being allowed to work remotely on a full-time
basis now, we are seeing a rise in employees working while on trips, in hotels, with the main
concern being that they are connecting to company infrastructure on unsecured Wi-Fi connections
that could be compromised. As auditors, it is not just the rise in technology on the audit side of
things that will be an adjustment moving forward but also the changes in how companies use
technology to complete their business daily that auditors will have to adapt to and work with the
companies to ensure that the same level of assurances can be given with the audit opinions as
before.
References
Doig, F. (2020, June 2). Internal Audit and cybersecurity in the wake of the coronavirus pandemic.
Ideagen. Retrieved October 27, 2022, from https://www.ideagen.com/thought-
leadership/blog/internal-audit-and-cybersecurity-in-the-wake-of-the-coronavirus-pandemic
Albrecht, W. Steve; Albrecht, Chad; Albrecht, ConanC. Information Security Journal: A Global
Perspective. Jan2008, Vol. 17 Issue 1, p2-12. 11p. 1 Diagram, 3 Charts. DOI:
10.1080/19393550801934331. , Database: International Security & Counter Terrorism Reference
Center
The Evolution of Audit in the Wake of the Pandemic (isaca.org)
Low-cost trends in audit fees and their impact on service quality: Multi-Search (snhu.edu)
