It has traditionally been recognised that auditing carries risk. It has been proved and continues to be proved that auditors suffer consequences when they accidentally or negligently insufficiently address risk in their work. It should be very difficult for auditors to underestimate risk in their work yet accidents continue to happen and serious ones at that. This session will be looking at the technical preparation of auditors for addressing risk as well as the analysis of some notorious cases where the auditors were found short of expectations in their attention to risk in their work lending credibility to the public. Auditing is the definition of risk itself; the risk of forming a professional opinion based on other people’s reporting. The auditor is seen by the public, regulator, authorities, investors, courts and a long string of stakeholders as the central person riding over all the pitfalls and failings of stewardship to ultimately stick that person’s neck out and pronounce a position. So many things can go wrong in this exercise. What is the safety net for the auditor? The auditor ignores the audit risk equation at his/her own risk, but the equation says it all. It is the epitome of audit risk; it defines audit risk. It addresses the auditor’s risk, that of the business of the client, that of the management of the client, the ethics, the culture, the effectiveness of the client’s control systems and governance in mitigating the business risk and the auditor’s own methodology risk. It is a universal coverage of risk which involves alertness and willingness to recognise risk in what auditors do. There is another risk, that of complacency in the misconception that this is a subject for complex markets. We are addressing audit risk and not market risk and this problem spans over any type of market including our little market here in Malta. We will be addressing the universality of risk as it attaches to audit irrespective of the complexity and size of the market and its operators.
The Speaker
Mario P Galea is a certified public accountant holding a warrant to practice both as an accountant and as an auditor. Currently practising as a business advisor providing governance oversight and advisory services to businesses and corporations. Serves as an independent non-executive director on the boards and audit committees of various listed companies in the financial and commercial sectors. Mentor and advisor to family businesses. Founder, managing partner and chairman of accountancy and audit firm EY in Malta until retirement in 2012. Specialised in auditing and assurance which he has practiced for 35 years in Malta and abroad. Lectured in auditing, assurance and professional and business ethics and led several training courses. Speaker at various business and professional conferences in Malta and abroad. Assisted businesses in several areas particularly relating to governance, accounting and systems of control. Served as President of the Malta Institute of Accountants and for many years formed part of the Accountancy Board which is the accountancy profession regulator in Malta. Served on various professional committees in Malta and abroad such as the council of the Federation des Experts Comptables (FEE) in Brussels (now Accountancy Europe). Member of the Ethics and Regulatory committees of the Malta Institute of Accountants in Malta.