Risk Communication from an Audit Team to Its Client

Abstract

The article discusses the paradoxical foundation of a risk decision and the challenges the paradox puts on the management of risk communication. The exploration is done from a social systems theory perspective; a theory that provides a comprehensive theoretical framework for social systems and their communication processes and addresses the complexity, risk and conflicts of interests (Section 'Systemic Audit: Widening the Perspective of Traditional Audit Approaches'). From this theoretical setting, the conclusion is derived that a statement about an organization's risk cannot be proven as a 'true' statement and that a receiver of an audit report (the client) will always have good reasons to question an audit team's risk communication (Section 'The Paradoxical Foundation of a Risk Decision and Associated Challenges for Risk Communication Illustrated by the Example of an Audit Finding'). The article gives some hints on how an audit team can deal with clients' needs by incorporating their requirements in its audit process, using concepts and tools from family therapy, brief therapy and systemic counselling (Section 'Unpicking the Paradox of Risk Communication').

Communication Barriers between External Auditors and Client/Management: A Maltese Perspective**

“…In fact, this technique is viewed as the most effective one by auditors and the second most effective by management. This is in agreement with Haferkorn's (2018) findings, which argue that this meeting is beneficial as the form and timing of communication are outlined.…”

“…One possible way to circumvent confusion and disagreements during the audit was highlighted by Haferkorn (2018), who argued that a meeting held at the beginning of the engagement proves to be beneficial since the form and timing of communication are deliberated (Chartered Professional Accountants of Canada, 2016). Zammit (2011) concluded that frequent and honest communication about things of common interest would strengthen the auditor-management relationship.…”

Certification as support for resilience? Behind the curtains of a certification body — a qualitative study

“…Generic requirements do also give the certified hospitals room to choose between different quality management tools that from their perspective meet the requirements the best. This means that when auditors try to communicate organizational challenges and requirements, such as managing risks, audit conclusions need to be constructed based on interactions, negotiation and dynamic communication practices with the auditees [ 45 ]. The certification body’s auditing approaches emphasized interactional audit processes.…”

Untitled

“…The advantages of the performance audit include the following (Performance audit, 2015): 1) expansion of the boundaries of financial control beyond formal estimates of resource allocation to improving the economic facilities that develop them; 2) comprehensive analysis of possible causes of inefficient use of budget funds; 3) creation of conditions for combatting corruption in government bodies by providing and widely disseminating information on the use of budget funds; 4) provision of legislative authorities with the opportunity to assess the effectiveness of decision-making on the regulation of the budget process proceeding from the previously identified data; 5) provision of executive authorities with information and recommendations to improve the efficiency of resource use; 6) impact on the development of strategic decisions based on early audit observations and notes in the field of financial policy (Performance audit, 2015). When conducting the performance audit of a quasi-public sector entity, which involves the implementation of the plan and programme of the audit event in terms of conducting analytical and audit procedures immediately at the object of the state audit, state auditors, as persons authorised for this purpose, must engage in the following: 1) collect audit evidence of appropriate quality/format; 2) if necessary, conduct additional analytical and audit procedures aimed at managing audit risk and/or ensuring the collection of necessary evidence, including conducting counter-audits and evaluating the facts identified during the audit for deviations from the indicators, namely, audit criteria; 3) draft an audit report; 4) conduct discussions on the identified facts and the draft audit report with representatives of the state audit object and (or) authorised bodies; 5) properly issue working audit files; 6) quality control procedures for conducting an audit event (Karybaev and Zhamkeeva, 2019;Haferkorn, 2018;Skoromtsova, 2019).…”