During difficult economic times, the #audit function budget is faced with cuts like many other departments. Reduction of the audit #budget in a time of company-wide belt tightening is not the best course of action, as a company often faces greater risks during such times. However, the heads of other corporate functions could make similar arguments regarding the indispensability of their respective services. If the audit function does have to absorb cuts, clear communication between all the stakeholders: 1) Chief Audit Executive (CAE), 2) Audit Committee and 3) Finance Chief is essential. The audit committee should be fully aware of the finance chief’s decision to slash the audit budget. The CAE should communicate the impact of the budget cuts to the audit committee in real and tangible terms. Maintaining the same level of audit coverage as before the budget/staff cuts can undermine quality. The CAE should consult with audit committee to identify areas of priority and clearly communicate the areas that will no longer have coverage. The downturn’s impact of the nature of the business’s activities should also be considered, with more attention paid to risks that arise from the downturn: whether important customers will pay their bills, whether suppliers will go bankrupt etc.
Posted on: Thu, 24 Oct 2013 23:40:27 +0000
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