Martin Dees

BDO has published ISRB 2024/04 EU Reporting: Corporate Sustainability Reporting Directive – Summary of Scope and Requirements The EU’s Corporate Sustainability Reporting Directive (CSRD) becomes effective for many entities in 2024. The CSRD significantly expands both the scope of existing requirements (including to some non-EU groups) and the sustainability reporting requirements, which will be in accordance with European Sustainability Reporting Standards. 

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This is a topic that has been on my mind lately. With the trending focus on quantifiable renewable energy and sustainability metrics it seems natural systems often take a backseat, but they should be a driver. Biodiversity is essential for the resilience of natural ecosystems—and natural ecosystems are essential to business: 55% of global GDP is moderately or highly dependent on them, according to a PwC estimate. That fact, combined with demands for environmental action on the part of a wide range of stakeholders and regulators, makes biodiversity loss a problem business leaders can’t afford to ignore. #biodiversity #naturalsystems #sustainability #environment #ecosystems

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✨ Auditing soft controls & ethical behavior 👀 Guidance from the Royal Netherlands Institute of Chartered Accountants Are you an auditor conducting audits of financial statements? Then you are familiar with revised ISA 315 Identifying and Assessing the Risks of Material Misstatement And you know: You have to evaluate “whether management has created and maintained a culture of honesty and ethical behavior" (paragraph 21b) But HOW to do that? 🤔 That’s where the Dutch Chartered Accountants kick in. Their NBA Practice Note 1148: 🏅Offers concrete guidelines for obtaining an understanding of the culture, behaviour and soft controls within entities 🏅Focuses on the behaviour-influencing factors themselves, and how they are part of the organisational culture 🛠 Includes methods & models for describing culture, including the model by Kaptein, which consists of eight types of soft controls 🛠 Lists some of the various techniques to analyse soft controls, e.g. desk research, interview, and behavioural observation 🚩 Helps identifying potential ‘red flags’ regarding tone at the top, e.g. clarity, example behavior, and openness to discussion 🚩 Lists Red Flags for each Soft Control 🎉 Includes Case Studies, Recommended Procedures, and Questions regarding Soft Controls The Dutch Chartered Accountants even provide a fancy definition 🥳 CONTROL RISK = Inherent Risk * Internal Control Risk * Detection Risk Have a look 👀 Koninklijke Nederlandse Beroepsorganisatie van Accountants (Royal Netherlands Institute of Chartered Accountants) NBA Practice Note 1148 Obtaining an understanding of soft controls relating to an audit of financial statements Impact of culture and behaviour on the risk assessment 8 February 2022 https://lnkd.in/eQnKEnam Muel Kaptein Erik van Bekkum #thefutureofgovernance #conductrisk #behaviourrisk #softcontrols #culture #humanfactors #ergonomics #safety #systemsscience #anthropology #behaviorscience #psychology #sociology #psychotherapy #governance #audit #internalaudit #financialaudit #risk #compliance #assurancefunctions

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There are current developments in the #ESG Auditor profession. One example can be seen in an interesting post by Henk Palte, Board member at the Association Of United Auditors in the Netherlands (see post here: https://lnkd.in/d84b8i_T ). In the comments below, you can find some documents that might bring some light to this discussion on the new panorama that opens for auditors and auditing companies due to #CSRD #CSDDD and #Sustainabilityreporting #finance #audit #sustainability

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The Role of Internal Audit: Does Management Really Understand It? Internal auditors play a crucial role in organizations by evaluating and improving, control, and governance processes. However, they often face challenges due to a lack of recognition and cooperation from management. This situation can compromise the effectiveness of their assessments and the implementation of organizational improvements. This article explores the function of internal audit, its importance, and how management can better collaborate with internal auditors to achieve the organization’s strategic objectives. https://lnkd.in/eV6vyB5a #auditor #compliance #government #auditing #fraud #iso #ethics #accounting #business #privacy #riskmanagement #boardofdirectors #businessethics #management

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Very important to see explanations and examples on the issued standard.

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On Friday, 21st of June, I spoke at the IIA conference in the Netherlands with great contributions from Hero Boonstra and Bart van Loon ✅ . It was such a valuable and interactive session where we discussed about governance and controls in getting ready for CSRD Reporting. Internal Audit plays a significant role in supporting their busines with getting ready for assurance and shouldn’t shy away from the topic. There is so much IA can contribute, as in the end it all comes down to governance, people and well documented procedures, even if the subject is not mastered by the function. So many issues encountered in current CSRD related internal audits resamble financial reporting audits. IA knows how to bring this subject to the table and give the proper priority. A valuable take away was the notion of the expanding exposure: Who were the readers of financial statements? Who could look into those numbers and make some sense out of that? Financial analysts, credit/ rating agencies, auditors… and now? Who do you think can make sense out of sustainability related information? I had a very interesting conversation with my 13 year old daughter who was able to raise fantastic comments about a gender pay gap disclosure in one sustainability report. It is time to wake up! Businesses will face a level of exposure and scrutiny never imagined before. Your business will become everyone’s business and IA has a crucial role to play with supporting their company to understand and mitigate these new risks. Thanks to the Dutch IIA for giving the opportunity of such a fruitful discussion! #iianederland #internalaudit #kpmg #kpmgnederland Hero Boonstra Bart van Loon ✅ #governance #CSRD Jeroen Van Tol #IIA2024 #IIACongres #Netwerken #Kennisdelen #Conformance #Performance #IIANederland #InternalAudit #IIA

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Auditing Research and Treasury In my present job at the Foundation for Auditing Research one big challenge is to show practical relevance of academic auditing research. Well, there is a lot indeed for the audit sector, but also for other finance professionals. Let me give you an example for Treasury simply based on one publication of W. Robert Knechel called "The Future of Assurance in Capital Markets: Reclaiming the Economic Imperative of the Auditing Profession" (American Accounting Association, 2020). This article summarizes the following academic evidence/findings (from diverse empirical research): - audits are valuable to market participants - external audits reduce risk to external stakeholders - auditing reduces a company's cost of capital - private companies benefit from audits in obtaining loans - auditor quality is associated with a lower cost of debt - other benefits of an audit include: fewer accounting errors, more efficient market reaction to earnings and reduced fraud risk. So these statements not only intuitively make sense but there is also clear academic evidence for them. For a Treasurer who is always interested in lowering capital cost this should be of value! #Foundationforauditingresearch #auditing #treasury #DACT

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The New IIA Global Internal Audit Standards have plenty to say about internal audit evidence and workpapers. "Considerations for Implementation" of Standard 14.6 goes into excruciating detail about the content and format of workpapers. But how long should we retain them? The standards only tell us to retain workpapers according to laws, regulations, company policies, and our own policies (which we need to set). In the digital era, there is nothing to prevent us from keeping them forever. But is that a good idea? Check out my thoughts on the attached blog. #internalaudit #auditevidence #auditworkpapers #theiia #globalinternalauditstandards

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The IFRS Foundation and EFRAG have recently released the ESRS-ISSB Standards Interoperability Guidance. This document provides a detailed analysis of the alignment and practical advice for companies adopting either set of standards. Key insights include: 🔹Alignment of general requirements, such as materiality, presentation, and disclosures for sustainability topics other than climate. 🔹Alignment of climate disclosures: The ESRS covers nearly all climate disclosures under ISSB Standards, while providing incremental disclosures. 🔹Essential information for entities starting with ESRS or ISSB to ensure compliance with both sets of standards. Read the guidance here: https://lnkd.in/dE9ERjKW #ESRS #ISSB #ClimateDisclosures #CorporateSustainability

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Checklists: An Essential In Your Internal Audit Toolkit for the Corporate Jungle! Read this post and more on my Typeshare Social Blog: https://lnkd.in/gRaPxuxp

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The proposed UK “Internal Audit Code of Practice” goes beyond the Global Internal Audit Standards when prescribing practices for internal audit functions. Check out my new AuditBoard blog to learn more.

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Auditing and the Socratic Tradition By chance today I came across a blog I wrote in February 2024 for the Institute of Internal Auditor’s “Building a Better Auditor” series. I read it again and it got me thinking. https://lnkd.in/e7m8dHdu For years I have been irritated by the claim of the legal profession to be the modern torch-bearer of the Socratic method. Some lawyers will tell you that the cut and thrust of the adversarial legal process reflects the prestigious tradition of the Socratic search for truth through questions and answers. Just as Socrates’ question-and-answer sessions with the citizens of Athens unmasked their ignorance, so the to-and-fro of legal questioning supposedly uncovers the truth. Or they might claim that the Socratic method is deployed to train lawyers – students are put on the spot with a series of challenging questions, and they learn by responding through pressurized dialogues. My response? Total baloney! Such claims profoundly misrepresent the Socratic method. The truth is that Socrates’ dialogues were not intended to be adversarial conversations. On the contrary, they were cooperative, not argumentative, searches for the truth. In Plato’s “Gorgias” the hostile Callicles refuses to cooperate in good faith with Socrates in a discussion, and the result is a breakdown in the dialogue. Socrates, in contrast, was interested only in cooperative dialogue: in “Theaetetus”, he describes himself as a midwife, metaphorically helping his dialogue partners to “give birth” to new insights into the truth. Similarly, auditing is a cooperative search for assurance. It is closer to an examination than to a cross-examination. Satisfactory auditing is almost impossible to achieve under adversarial conditions. Of course, auditors and auditees frequently disagree, but the differences of opinion rarely rise to the level of legal disputation. An auditor who faces hostility is within her rights to withdraw from an audit on the grounds of non-cooperation. Conflict is central to legal proceedings, but not to auditing. Moreover, the caricature of the Socratic method used in legal training encourages glib responses, resulting in what Socrates dismissed as the “rhetoric” (persuasive speaking that is often manipulative and false) peddled by sophists like Protagoras. If any profession today can justifiably lay claim to the Socratic tradition, it is auditing. The collaborative approach of auditing rather than the adversariality of the legal process is closer to the intentions of Socrates. As I conclude in the blog: “Auditors are modern inheritors of one of the most prestigious, ancient traditions of truth-seeking through cooperation”. #adversarial #audit #Callicles #cooperation #Gorgias #IIA #Plato #Protagoras #Socrates #Socraticmethod #Theaetetus #truth

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IFRB 2024/07 IASB issues Amendments to the Classification and Measurement of Financial Instruments BDO has published IFRB 2024/07 IASB issues Amendments to the Classification and Measurement of Financial Instruments. On 30 May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (the Amendments) https://lnkd.in/eG7xNg_X

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