Solved November 03, or fraud and to design the nature, timing, and extent of further audit procedures.
Wells Fargo's account fraud scandal in revealed some banks still have a long way to go before they resolve toxic workplace cultures. In March, the FCA also published a new discussion paper on how to transform culture in financial services. Clearly, optimising company culture is high on the agenda for UK regulators, but how are businesses addressing these issues?
Many rely on their internal audit IA departments to provide assurance. Approximately 55 per cent of IA teams are attempting to audit culture in some fashion, according to PwC.
But where should auditors focus their attention? A recent Deloitte report has highlighted six key areas of culture auditing for the financial services industry. The tone from the top Board members and senior managers are expected to lead by example.
There are several signs that businesses have correctly instilled the right tone at the top, including: Leaders should clearly set out expected behaviours, as well as explain how their own decisions align with the firm's values and targets.
The best board and executive committee meetings explicitly cover culture as a standing agenda item, including its impact on other issues, such as customer or market outcomes. Businesses should practice what they preach and have a broad mix of individuals from different backgrounds at the board level.
Firms must provide independent non-executive directors with enough time and resources to address cultural concerns. Strategy and purpose A strong strategic approach to improving a company's culture must underpin a solid tone at the top.
This is typically displayed through: Closely linking cultural expectations to a business's values are important, with clear articulation of how staff are expected to behave across different areas of the business.
Organisations should show how cultural expectations have been communicated throughout the firm. Setting up feedback mechanisms, such as a whistleblowing process, is also best practice.
The workforce must be able to demonstrate they understand the desired culture, as well as articulate it to others. Individual accountability Senior-level accountability is key, with the SMCR just one of a number of regulatory requirements worldwide to ensure individuals are held responsible for failings.
Firms with sufficient individual accountability should have: These are a regulatory requirement in the UK for certain firms. Where these statements aren't mandatory, similar documentation outlining lines of accountability should be in place. What policies are in place when procedures are breached?
How robust are these processes? And is there evidence they have been used appropriately in the past?
Accountability and conduct expectations should be clearly written down and distributed across the business to ensure awareness of lines of responsibility.The purpose of Auditing: A Journal of Practice & Theory is to contribute to improving the practice and theory of auditing. The term “auditing” is to be interpreted broadly and encompasses internal and external auditing as well as other attestation activities (phenomena).
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We find evidence.