RCA TRAINING
Root Cause Analysis training by Sologic provides the tools, skills, and knowledge necessary to solve complex problems in any sector, within any discipline, and of any scale.Learn More
SOFTWARE
Sologic’s Causelink has the right software product for you and your organization. Single users may choose to install the software locally or utilize the cloud. Our flagship Enterprise-scale software is delivered On Premise or as SaaS in the cloud.Learn More
The closing weeks of 2019 have seen the publication and distribution of the long-awaited Brydon Review into Improving Audit Quality and Effectiveness. This Government-backed review was written by former chairman of the London Stock Exchange, Sir Donald Brydon. Although the audit sector remains strong in the UK and the process is integral to any functioning society nobody has been under any illusion that urgent reform is required to rebuild confidence in the profession. High-profile corporate failings at organisations such as Carillion, BHS, Thomas Cook and Patisserie Valerie have all served to dramatically erode trust and demand change in the way FTSE350 firms provide their audit services.
Brydon’s review joins a pre-existing fabric of recent reports from the Competition and Markets Authority, the International Standard on Quality Management (ISQM1), the Dept of Business, Energy and Industrial Strategy and Sir John Kingman – all questioning the ability of the sector to continue to operate with effectiveness without a significant shake-up. Trust, quality, transparency and independence drive the narrative throughout all of these reviews.
Within its 135 pages the Brydon Review recommends a focus on improving audit quality and transparency. For Brydon, this needs to be established through the complete separation of the audit profession from wider accountancy. Audit teams will need to be governed via their own set of core principles and by a specific licence to operate. Alongside this, clear separation between the teams who are negotiating the audit fees and the teams carrying out audit work must take place.
Further still, ways to stimulate improved communications and interaction between auditors and shareholders must be uncovered and implemented. Similar cultural challenges were highlighted by this year’s International Standard on Quality Management paper (ISQM1) when it proposed that high quality Root Cause Analysis (RCA) should be adopted as the preferred method to understand, explain and remedy major failings in audit quality. A deeper dive into audit and RCA can be found here.
Sir Donald notes that embracing technology and innovation is essential and will require firms to introduce expertise outside of the traditional accountancy background. The review is clear that the inclusion of non-accounting specialists sitting on audit panels is essential to ensure better integration and encourage diversity of thinking. It has recently been recognised that specialism has dominated over diverse thinking within the audit sector and that this may be, in-part, responsible for many of the blind spots and structural failings in a raft of recent major audit deficiencies. As a result, a growing number of firms have been prompted to go back to the drawing board in their audit quality functions. These must seek out fundamentally new ways to reveal systemic failings. Uncovering new ways to create effective teams, improve accountability, investigate challenges with genuine rigour and implement findings have been the essential early steps in pursuit of measurable improvement.
The 135 pages of the Brydon Review are part radical, part progressive. They map out the first stages of what will be a demanding and transformative journey for a sector that has long been immune to such existential challenges.
Sologic are delighted to be the trusted provider of an audit-centric Root Cause Analysis method and software that is providing the evidence-based, structured and analytical foundations for these major challenges – helping audit become fit for the future.
Contact Us if you would like to know how we are helping a growing number of international audit firms tackle the challenges laid out in Brydon and similar reviews.
RCA TRAINING
Root Cause Analysis training by Sologic provides the tools, skills, and knowledge necessary to solve complex problems in any sector, within any discipline, and of any scale.Learn More
SOFTWARE
Sologic’s Causelink has the right software product for you and your organization. Single users may choose to install the software locally or utilize the cloud. Our flagship Enterprise-scale software is delivered On Premise or as SaaS in the cloud.Learn More