A new approach to audit

This leaflet explains why audit approaches should be reviewed for all companies and not only listed ones submitted to section 404 of SOX. The reasonning for that is that accounting standards, soo far, may hide basic phenomena and among the critized ones is the "Fair Market Value" of US GAAP n° 157 (or  n° 39 of IFRS). This text was written before the financial crisis and appear now as prophetic. It recommands that practized audits processes (US GAAS or International ISA's) go back to basic as they are already set for. They should be focused and the reports should be representing as to;

Does the reporting system is organized and operated in order to insure that all transactions are going into the system

Is the processing of the resulting data secure and consistently restitutes those data.

Are the accounting agregats sensible for the management and meaningfull from a business standpoint before refering to any accounting standard.

And only last, is the bridges to financials correct to have financials compliant to the choosen accounting standards or any applicale or requested reporting formats by authorities.

The text reminds what the hierarchy of the duties to be fullfilled by auditors should be. 

Of course it increases the accountability of all contributing the quality of the financials including the independant auditors and gives more usefullness to the work performed.

The innovation is that efficiency in terms of use and quality comes before compliancy like principles should come before rules.

It explicively states that accounting standards are just a langage and have never any universality. They will at a time like the Fair Market Value become wrong at a time and that audits should not rely on them to get appropriateness.

You can download the document in English and also in French.