New York – Audit Integrity is an independent research firm that rates public companies (over 7,000 in North America) based on their corporate integrity, focusing in particular on a company’s Accounting and Governance Rating (AGR). In a recent press release, Audit Integrity challenged the 300 North American public companies rated “Very Aggressive” by its AGR measure to try its RiskProfiler application.
RiskProfiler helps corporations to identify risks related to financial reporting, such as accounting irregularities, potential fraud, or misrepresentation, prior to regulatory filing. The Audit Integrity RiskProfiler allows companies or auditors to enter confidential financial information, at the corporate or divisional/subsidiary level, and run the Audit Integrity analytics engine as an Excel add-in. Comparisons are made to prior financial statements and industry benchmarks to identify specific areas or risk. Once an assessment is complete, RiskProfiler generates a statistically driven summary of major risks, flagged metrics, and ratio tables that are use to identify and address areas of potential fraud-related risks.
To view the list of 300 companies identified as “Very Aggressive” by RiskProfiler and to see a sample report, you can download Audit Integrity’s press release and go to page 3.
Jack Zwingli, CEO of Audit Integrity, was recently interviewed by Francine McKenna, who publishes re: The Auditors, a site that provides news and commentary on audit and accounting issues. An excerpt follow, but you can read the whole interview here:
e: The Auditors: Where do you see the auditors’ role in this process given their PR claim, after scandals such as Madoff, Stanford, and Satyam were uncovered, that they are not responsible for uncovering fraud?
Jack Zwingli: You and I both know that auditors do have a responsibility to assess risk of fraud and to adjust their audit program, procedures, and testing to address higher fraud risks and risks of misstatements and other financial reporting risk, whether intentional or not. I really can’t understand how and why any get away with those statements. I am thankful for the firms that do accept their responsibility for identifying fraud risk and are wiling to use [the] tool in order to fulfill that obligation.
McKenna, who is herself an expert on governance and audit issues, also comments:
Go ahead, trade the rumor. But in this environment these companies… will fail when you least expect it, in an “unpredictable” way, and regardless of the ongoing propping up. Why? Because when companies, their management, and the watchdogs refuse to accept reality over and over again, they are daring fate to intervene and hand them a situation, an event, a level of volume of problems that they can no longer manipulate. Unless major, fundamental changes occur in many of these companies, the end is inevitable. Unfortunately it will defy all “logic” except the actual facts.