Managing in an Economic Decline: Priorities on Top Executives’ Agenda

Author:Şerban TOADER, KPMG

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Keywords:risk management, liquidity management, alternative funding, tax planning, cost cutting, audit team competences, professional skepticism, fraud, going concern

Abstract:
The challenges raised by the economic environment are directly reflected in the auditor’s effort to evaluate the impact on the entity’s financial position and performance. Understanding the risks to which the entity is exposed to following the economic climate and the methods to manage those risks becomes a key part of the audit engagement contributing to the delivery of quality services, enhancement of business relations based on mutual trust.\r\nThe article focuses on current period issues regarding liquidity management and formulates suggestions on the identification of alternative funding sources. The topic of tax planning is also addressed and new arguments are presented for the scientific approach on cost reduction. In this context, risk management strategies became top priority. Another area for entities to focus on is internal controls. Other topics discussed start with financial statements disclosures, planning for the present and the future, and end with a distinct chapter on audit issues arising from current market conditions.\r\nRequirements regarding audit team members, audit engagement planning, assessment of the adequacy and flexibility of the internal risk management framework, liquidity profile, increased fraud risk as a result of market pressures, financial instruments valuation and going concern are the topics addressed on the audit issues.\r\n\r\n

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