Thread by @SAH16928046

The #Wirecard Scandal once again highlighted the incompetence of external #auditing firms.
That is why firms must invest in setting up proactive Corporate Governance, Risk Management and Compliance desks.
These are very important silos in a company, which must work together.

The best and most sought-after professionals should be working in these areas, especially after the #ENRON and Arthur Anderson Fiasco led to the naming and shaming of the audit and financial reporting professions.

Directors appointed to committees should also be well trained to understand the nature of top financial and operational risks, which can cause potential material hazards and affect the bottom line.

The BAC Board Audit Committee should oversee all activities pertinent to auditing and risks, continuously.

Also, the #BRMC Board Risk Management Committee should work separately and must have well-trained risk personnel who understand financial risks, fraud risks, cyber risks, and other operational risks which include process risks and legal risks.

The problem is that their incident reporting is not proactive risk management.
That is where, and why, companies do fail!

Auditors usually review risks in a latent manner, as per the audit plan submitted to the board; whereas, the first, and second lines of defence should proactively monitor risks.

Using CORE Risk libraries which make use of KRIs, Risk registers, Risk Taxonomy, Risk Appetite Statements, Risk tolerances, Risk parameters, Risk Forecasting models, Detective and Preventive Internal controls, RPN- Risk Prioritization Numbers, Risk escalation procedures,

Risk Practioner Rulebooks, other interdisciplinary best practices, etc

I am surprised that with the existence of multiple risk management and auditing internal controls standards that exist in the financial tech services industry, this happened.
I would like to end my chain of thought by saying that all #insolvencies are not due to #fraud.

Some might also occur due to sheer human incompetence, economic downturns, violation of risk appetite controls, unrevised policies or technological drawbacks, etc.

However, it is now established in the case of WIRECARD that the fraud risk became the Achilles heel which led to bankruptcy.
The external auditors, appointed by the BAC Board Audit Committee, should also be investigated as per the law.

Such audit firms, which are deliberately ignoring risks or are caught cooking the books, should be banned, not just penalized.