From boards of directors to ‘the shop floor’, many companies do not feel well served by their approaches to assurance; on the contrary, many are frustrated but don’t know where to turn for better ideas. Put simply, many assurance approaches don’t do what they should; the right messages usually don’t find their way to the right people. Sure, some messages do but there often seems to be an elephant in the room that noone wants to talk about. Then one day, the elephant decides to leave and takes a wall out. Which is what the assurance approach was meant to avoid.

The problem is seldom that the firm has dedicated insufficient resources to assurance; the problem is almost invariably that the firm has not dedicated the right resources to assurance or given it the right focus.

Courtesy of regulation and very effective marketing, the accounting profession has captured the assurance agenda outright. And so that is what is looked at; that is where the assurance torch gets shone. But assurance over accounts is only a part of the puzzle; while important for account validation and fraud prevention and detection, is not where firms win or lose.

Firms need to recapture their assurance frameworks from their auditors and make them more relevant to the success factors of the business – to focus on business risks, control routines, management control performance as well as account validation. And they need to make sense from the bottom of the firm to the top; they need to test that the business model is sound, that it is operating effectively and is well controlled and that risks are understood and managed in divisions as well as at the centre; it needs to confirm that the firm has the competencies it needs now and to build a successful business in the future, and it has those competencies where they are needed.

To recapture your assurance framework and focus it where it can help most, contact us. We work with firms to reengineer assurance to improve its relevance and effectiveness. We work with firms to align risk and assurance functions to the new framework, and to ensure it is meeting the needs of its users, from the boardroom to the shop floor.

For most firms, the idea of ‘internal control’ has become indelibly associated with the Sarbanes Oxley Act and COSO. But COSO, on which SOX §404 is based, is almost 20 years old. That represents an appallingly low rate of innovation in assurance and internal control. It is time to recapture assurance over internal control as an essential and dynamic aspect of the governance agenda.

KEY RESEARCH PARTNER

Research in governance risk & assurance

We are founder sponsors of the International Centre for Governance Risk & Assurance, based in London.

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