When external auditors discover control deficiencies, especially those that rise to the level of a significant deficiency or material weakness, the remediation process can quickly tie up substantial internal resources public and private companies often lack. Persistent accounting and audit staffing shortages in the last two years have compounded the matter further.
If there’s no one (or no team) on the bench with the required skills and capacity to make remediation their top priority or even full-time job, what’s the next step?
To navigate the maze of remediation efficiently, management should look to strategic audit advisors capable of:
- Filling gaps immediately as a flexible extension of management.
- Leveraging deep technical expertise free of conflict.
- Structuring remediation efforts around proven program management methodologies and frameworks.
- Designing strategies to solve near-term issues while simultaneously establishing proactive best practices and audit-readiness infrastructure for use in every future audit cycle.
- Aligning cultures of all parties engaged in the audit process to promote seamless execution, productive collaboration, and ultimate confidence in the results.
A World of Difference: Audit Support That Frees Up Key Staff for Value-Add Activities
Remediation will stretch internal capacity, prompt the reallocation of resources, and force management to make difficult decisions on whether to delay or abandon core business objectives. In fact, 71% of organizations believe they don’t have the talent or bandwidth to manage emerging risks – when an audit identifies deficiencies that need urgent attention, this gap will widen further.
Plus, the Public Company Accounting Oversight Board (PCAOB) notes that companies typically take 6-18 months to fully address a material weakness. That’s valuable time companies will never get back.
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Will the months or yearslong remediation effort overlap with enterprise digital transformation programs, complex transactions (IPO, M&A, etc.), or expansion into new markets? These high-value initiatives are vital to current/future growth and competitive advantage – and will themselves take years of work and investment to orchestrate.
Balancing these activities with the regulatory and investor demands resulting from an audit report represents a serious fork in the road for even the largest enterprises at a time when PCAOB-identified deficiencies are on the rise.
There’s a real opportunity cost involved with how these concurrent efforts are shepherded – not to mention the total “true” cost on the balance sheet.
Beyond Root Cause Analysis: An Audit Liaison
Material weaknesses rarely stem from a single, isolated issue. They often involve intricate interdependencies between processes, people, and systems. Identifying the root cause of each deficiency is time-consuming and requires a meticulous, well-trained team.
CrossCountry Consulting, a strategic audit advisor with extensive Big 4 audit experience, can manage all aspects of an audit, including remediation of deficiencies, significant deficiencies, and material weaknesses. This work entails:
- Total immersion in the issue, including a full understanding of the root cause of the deficiency.
- Defining a clear path to remediation as urgently and effectively as possible, including preparation of all necessary documentation.
- Training internal staff on what to look for, avoid, and better understand in future remediation efforts.
- Auditor communications, including responding to auditor questions and inquiries.
- Executive reporting of issues, remediation progress, results, and opportunities, including board and audit committee communications.
- Other operational enhancements, including automation, technology systems deployment, or process re-design, within Finance, Accounting, IT, and Risk functions.
Audit support tackles all the issues dropped in the lap of management and impacted stakeholders without sacrificing critical ongoing initiatives outside of the audit process.
That means:
- Devoting full-time focus to the remediation without unnecessarily distracting internal staff with complex requests.
- Propelling forward momentum daily so remediation is wrapped up on time and on budget.
- Reducing staff burnout and low morale during a high-pressure period.
- Removing information silos within the organization, which generates enduring downstream benefits even after remediation.
Audit Impact Where It Counts
As much as companies, auditors, regulators, and investors would appreciate remediation being a one-and-done housecleaning, the truth is that remediating deficiencies is often a multi-year process. A strategic audit advisor can assist management in architecting a control environment that prevents recurring issues and anticipates future risks, in addition to realizing long-term cost savings that avoids increased audit fees, regulatory sanctions, and loss of investor trust.
As a firm built with Big 4 pedigree, CrossCountry Consulting’s audit-readiness specialists speak the language of auditors and take the burden off management teams. We drive value at all points in the process, with the ability to get involved before, during, or after an audit – wherever support is needed, our team plugs in.
To get started on your remediation journey, contact CrossCountry Consulting.