For several reasons, stakeholders, including investors, shareholders, and customers, are interested in adding value to a business. First, added value to a business implies that the company effectively utilizes its resources to generate profits and enhance its performance over time. This aligns with investors’ and shareholders’ objectives of maximizing investment returns.
Moreover, stakeholders are interested in added value because it signifies that the company is operating efficiently and effectively, focusing on optimizing resources and generating value for its customers. This can help attract and retain customers by providing quality products or services and maximizing customer satisfaction.
Added value to a business also implies that the company is managing its risks appropriately and adequately managing regulatory compliance issues. This helps protect the company’s reputation and mitigate legal and financial risks, which can ultimately impact shareholder value.
Stakeholders are interested in added value to a business because it signifies the company’s focus on operational efficiency, profitability, and overall success, which aligns with the stakeholders’ objectives of maximizing returns on their investments and ensuring the business’s long-term success. Every business seeks ways to add value and improve its bottom line, but finding the right solutions can be complex. Too often, companies try to solve this problem alone, wasting time and money and primarily focussing on solving audit issues reported by either the internal or external auditor can be time-consuming and costly when losing the objectives out of sight.
Regulatory pressure on internal audits, especially audit follow-up procedures, has increased since the financial crisis. It is common for regulators to refer an issue, known as a Matter Requiring Attention (MRA), to an audit after raising an MRA with a business unit. By doing this, the regulator asks, “Why did the audit not catch this?” or “Why is this matter not being resolved?” The auditors must respond by conducting a review (or post-mortem) to determine if they covered that area and, if so, why the issue was not identified. If the case were reported, the regulator would want to know why it was not remediated. The auditors must then document and report their findings to the regulator.
As a result, stakeholders must consider the number of remediated audit issues relative to the number of non-remediated ones. An organization can achieve high scores on all aspects that stakeholders care about, such as conformity with core principles, compliance with standards, and so on. Still, if observations are not being remediated, the audit’s added Value to the organization is limited as risks remain unmanaged, and objectives are not achieved as efficiently and effectively as possible.
An independent and fresh eye could help an organization take a comprehensive look at its operations and provide tailored recommendations to help you reach your goals.
A fractional CFO can provide valuable assistance in monitoring audit issue remediation. Here are some of the ways they can help:
Develop a remediation plan: A fractional CFO can work with internal and external audit teams to develop a remediation plan that identifies areas of concern and prioritizes them based on the level of risk involved.
Allocate resources: The CFO can work with the audit team to allocate resources effectively to address remediation priorities. This includes identifying staff or external resources to implement necessary corrective actions.
Monitor progress: A fractional CFO can help monitor the progress of remediation efforts and ensure corrective actions are taken promptly. They can work with the audit team to establish clear timelines and milestones to track progress.
Report to stakeholders: The CFO can communicate the progress of remediation efforts to the board of directors and other key stakeholders. They can provide periodic updates on the progress of remediation efforts and any potential consequences of non-remediation and help prioritize resolutions to identified issues.
Implement effective financial systems and controls: A fractional CFO can help implement effective economic strategies and controls to prevent future audit issues. The CFO can limit the number and severity of future audit issues by improving financial management processes and complying with internal and external regulations.
In conclusion, a fractional CFO can provide valuable assistance when monitoring audit issue remediation. They can develop a remediation plan, allocate resources effectively, monitor progress, report to stakeholders and implement effective financial systems and controls. By collaborating with internal and external audit teams, a fractional CFO can help ensure that audit issue remediation efforts are successful and that the organization can achieve its strategic objectives while minimizing risk.
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Jeffrey Denissen CPA, CA, CIA
Founder and Managing Director of J. Denissen Chartered Professional Accountant Ltd Provider of Fractional CFO Services.
T: 250 225 0437 | E: Jeffrey@jdenissencpa.com | W: http://www.jdenissencpa.com